Nordea: Swedish Economy Poised for Upswing in 2026

The Swedish economy has begun a recovery in 2025 and is set for a significant upswing in 2026, according to Nordea Bank's new economic outlook. Domestic demand is expected to increase as households have improved their financial standing and regained confidence. The export industry has navigated global challenges, and its outlook is healthy.

Nordea forecasts Swedish GDP to grow by approximately 3% in 2026. The household debt-to-income ratio has decreased significantly due to falling interest rates and steady income growth. Although inflation is expected to remain low in 2026, partly due to temporary factors, it is projected to normalize in 2027. Stronger economic conditions will reduce the need for further monetary policy stimulus.

The unemployment rate is forecast to fall to 5% based on the new BAS measure. Despite the improving economic climate, low population growth is limiting Sweden's long-term growth potential. Investment in the construction sector is showing signs of picking up, although housing construction has stabilized at a level below previous peaks.

However, the economic outlook carries risks, particularly related to the global security and trade policy situation. Nordea also notes that increased public spending, including defense investments, combined with tax cuts for households, will impact public finances.