Ministry of Finance revises its growth forecast upwards this year
Today, Minister for Finance Mikael Damberg presents the Ministry of Finance’s latest forecast for the economic situation. The Swedish economy is expected to grow by 4.9 per cent this year, an upward revision of 0.5 percentage points compared with the previous forecast. Sweden’s GDP is back at the levels forecast before the crisis.
The situation regarding the pandemic remains uncertain, but so far the Swedish economy has recovered strongly. This year, GDP is at a higher level than before the pandemic. Growth in 2021 is primarily driven by household consumption – which fell sharply in the wake of the pandemic – but also by investment.
“The recovery has been rapid compared with previous economic downturns and the Swedish economy has done well compared with many other countries in the EU. The fact that we entered the crisis with historically strong public finances has been crucial for the rapid recovery,” says Minister for Finance Mikael Damberg.
Growth next year is also expected to be high, if somewhat lower than this year. The Ministry of Finance expects GDP to grow by 3.4 per cent in 2022 and by 1.4 per cent in 2023.
The slight slowdown in growth next year is due in part to the fact that the recovery phase is partially over and that disruptions in the global supply chains and component shortages in industry mean that many companies continue to have problems meeting demand. The recent increase in the spread of COVID-19 is also expected to affect economic activity.
As always, forecasts are associated with great uncertainty. This is particularly true now, in view of the pandemic. It is difficult to predict how infection rates will develop. However, the economic impact of behavioural changes and current infection control measures are expected to be more limited now than during the acute phase of the pandemic.
“To some extent, the world has learned to manage the virus, and restrictions are designed differently than earlier in the pandemic. As a result, economies should be less severely impacted. At the same time, we must remember that the conditions ahead can change quickly. Infection rates are now once again increasing in many countries, which can of course have economic consequences,” says Mr Damberg.
Energy prices have risen markedly in Europe in the second half of the year. This has contributed to a high rate of inflation in many European countries, including Sweden. The rate of inflation in Sweden is expected to slow over the course of next year, as energy prices are expected to contribute less.
As in many other countries, the pandemic has had a major impact on the labour market in Sweden. However, the recovery has begun strongly and is expected to continue as employment rises rapidly next year. Unemployment, which is forecast at 8.9 per cent this year, is expected to fall to around 7 per cent in 2023 – an estimate that remains unchanged since the previous forecast.
General government net lending is estimated at -0.8 per cent of GDP in 2021. This signifies an improvement of almost 2 per cent of GDP compared with 2020, when public finances were weighed down by recession and extensive crisis measures. Net lending is expected to reach a balance in 2022 and be further strengthened in subsequent years. At that time, the public finance surplus will contribute to reduced public sector debt. Sweden’s gross debt as a percentage of GDP is among the lowest of the EU Member States, and the buffers in the Swedish economy are good.
Press Secretary to the Minister for Finance Mikael Damberg
Phone (switchboard) +46 8 405 10 00
Mobile +46 73 074 05 57
email to Mirjam Kontio
Head of the Macroeconomic Forecasting Division
Phone +46 8 405 96 21
email to Karine Raoufinia, via senior registry clerk
Head of the Division for Public Finances
Phone +46 8 405 47 18
email to Thomas Bergman, via senior registry clerk