Sweden: Economic and Political Overview
In this page: Economic Outline | Political Outline | COVID-19 Country Response
For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
Despite Sweden's exposure to global trade dynamics, Covid-19 has had a rather limited impact on its economy compared with most other European countries. GDP returned to its pre-pandemic level in 2021, and continued growing in 2022: the IMF estimated a 2.6% increase in GDP, supported by private consumption and investment. However, the net contribution of foreign trade was negative due to high import growth, and the economy slowed down towards the end of the year. For 2023, pressure on private domestic demand due to higher input costs, consumer prices and interest rates, as well as a tighter monetary policy (variable interest rates on mortgages are widespread) will weigh heavily on growth, with the economy expected to enter a recession (-0.1% as per the IMF forecast, -0.6% according to the EU Commission). The improvement in global economic conditions and slower inflation should contribute to a rebound in 2024 (+2.1%).
Sweden is among the few advanced European economies to show both a current account surplus and low public debt. Despite the phasing out of COVID-19 support measures, new aid packages were implemented to contrast high energy prices and the impact of Russia’s invasion of Ukraine, resulting in a government budget deficit of 0.3% of GDP. However, the general government balance is expected to return into positive territory this year (0.1% of GDP) and in 2024 (1.1% - IMF) thanks to improved tax revenues. The country’s debt-to-GDP ratio is among the lowest in the EU and was estimated at 33.5% in 2022. It is assumed to follow a downward path over the forecast horizon, at 31.2% in 2023 and 28.8% the following year. A sharp increase in imported commodities and in energy prices contributed to a record-high inflation rate of 7.2% in 2022 and forced the Riksbank to accelerate interest rate rises. Due to the delayed pass-through of the weakening in the krona exchange rate, inflation is expected to remain high this year (around 6.6%) before decelerating more consistently in 2024 (1.8% - EU Commission).
The country’s unemployment rate – at 7.6% in 2022 – returned to its pre-pandemic levels. Despite labour shortages in a wide range of sectors and the expected economic slowdown, the IMF sees the unemployment rate decreasing marginally in 2023 and 2024 (7.4% and 7.3%, respectively). Overall, Swedish citizens enjoy a high per capita GDP of USD 63,877 (PPP – 2022), 18.3% higher than the EU’s average (USD 53,960), and the European Anti-Poverty Network (EAPN) estimates that only 2% of Sweden’s population lives in serious material poverty conditions. Nominal wage growth, however, has been lagging behind inflation, resulting in a reduction of households’ real disposable income.
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 547.05 | 636.86 | 585.94 | 599.05 | 615.49 |
| GDP (Constant Prices, Annual % Change) | -2.2 | 5.4 | 2.6 | -0.5 | 1.0 |
| GDP per Capita (USD) | 52,706 | 60,930 | 55,689 | 55,395 | 56,416 |
| General Government Balance (in % of GDP) | -1.7 | -0.3 | 0.1 | 0.4 | 0.3 |
| General Government Gross Debt (in % of GDP) | 39.5 | 36.3 | 31.7 | 32.3 | 32.9 |
| Inflation Rate (%) | 0.7 | 2.7 | 8.1 | 6.8 | 2.3 |
| Unemployment Rate (% of the Labour Force) | 8.5 | 8.8 | 7.5 | 7.8 | 8.0 |
| Current Account (billions USD) | 32.20 | 41.46 | 24.95 | 23.21 | 24.01 |
| Current Account (in % of GDP) | 5.9 | 6.5 | 4.3 | 3.9 | 3.9 |
Source: IMF – World Economic Outlook Database, Latest available data
Note : (E) Estimated data
Agriculture represents 1.3% of the Swedish GDP and employs around 2% of the workforce (World Bank, latest data available). The main agricultural products are grains (particularly oats, wheat, barley, and rye), potatoes and other root crops, vegetables, and fruits, as well as dairy products, meat and wood. While production exceeds domestic consumption, a significant amount of food needs to be imported due to a lack of crop variety. Sweden has a wealth of natural resources: forests, iron, lead, copper, zinc and hydroelectric energy. The country has 3 million hectares of agricultural area and almost 28 million hectares of forest area (FAO), with a total of 58,218 agricultural holdings (data Swedish Board of Agriculture - 2022).
The industrial sector contributes 22.6% of GDP and employs 18% of the workforce. It is dominated by groups such as Volvo, Saab, Ericsson, ABB, AstraZeneca, Electrolux, Ikea, H&M, etc. Sweden's main manufacturing activities are steel, automotive, chemical, forestry, industrial machinery and equipment, automation and food processing equipment. The World Bank estimates that the manufacturing sector alone accounts for 13% of GDP. The new technologies and biotechnologies sectors are also of significant importance in the economy.
The tertiary sector, driven by telecommunications and IT equipment, employs 80% of the active workforce and contributes 64.8% of GDP. The banking sector is comprised of a total of 121 banks, including 41 commercial banks, 33 foreign banks, 45 savings banks and two cooperative banks; moreover, it employs around 2% of the workforce, accounts for 4.5% of GDP and contributes to 10% of the corporate taxes revenue (European Banking Federation). The travel and tourism industry is also important to the Swedish economy: according to the latest data from Visitory, between January-October 2022 registered accommodation sales reached SEK 32.2 billion, marking an increase of EUR 17.3 billion from the previous year, with the country receiving almost 6 million arrivals from foreign tourists (+21.1% year-on-year).
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 1.7 | 18.4 | 79.9 |
| Value Added (in % of GDP) | 1.3 | 22.6 | 64.8 |
| Value Added (Annual % Change) | 3.2 | 5.7 | 4.8 |
Source: World Bank, Latest available data.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
See the country risk analysis provided by Coface.
A party must gain 4% of the national vote or 12% of a constituency vote to enter the single-chamber parliament. Coalitions and minority governments are widespread. Social Democratic Party and Moderate Party are the largest parties in the parliament.
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
To find out about the latest status of the COVID-19 pandemic evolution and the most up-to-date statistics on the COVID-19 disease in Sweden, please visit the website of the Swedish Public Health Agency (in Swedish). Further information can be found on the website of Statistics Sweden.
For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.
To find out about the latest public health situation in Sweden and the current sanitary measures in vigour, please consult the official portal Krisinformation, including the up-to-date information on the containment measures put in place and public health recommendations. Further information can be found on the website of the National Board of Health and Welfare (in Swedish).
The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.
The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.
For the information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the website of the Swedish Customs (Tullverket). In order to consult the latest news concerning businesses, visit the website of the Ministry of Enterprise and Innovation.
The “Guidelines for border management measures to protect health and ensure the availability of goods and essential services” issued by the European Commission can be consulted here.
For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to Sweden on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
For information on the economic recovery scheme put in place by the Swedish government to address the impact of the COVID-19 pandemic refer to the official Government’s platform. Further info can be accessed on KPMG's website.
The information on the EU’s economic response to COVID-19 and the actions to minimise the fallout on the EU member states’ economies of the COVID-19 outbreak is available on the websites of the European Commission and the European Council.
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) taken by the Swedish government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Sweden in the IMF’s Policy Tracker platform.
To find out about the local business support scheme established by the Swedish government to help businesses to deal with the economic impacts of the COVID-19 epidemic on their activity, please consult the official Government’s platform, which also provides information regarding the crisis package for small enterprises, the crisis package for jobs and transition and the increased loan facilities and credit guarantees for Swedish businesses.
For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.
For the up-to-date information on possible support plans for exporters in Sweden, if applicable, please consult the website of the Swedish Export Credit (SEK), as well as that of the Export Credit Agency (EKN).
The European Commission adopted a Temporary Framework for State aid measures to support the economy in the COVID-19 outbreak, which enables short-term export credit insurance to be provided by the State where needed.
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