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Economic and political overview

Economic Overview

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, with GDP returning to its pre-pandemic level in 2021. After experiencing a mild contraction in 2023 (-0.2% - chiefly on account of stagnating domestic demand), real GDP growth was estimated at 0.6% in 2024, as the fading inflation shock, improved financial conditions, lower interest rates easing debt burdens, and supportive fiscal policy boosted domestic demand growth toward year-end. Consumption is expected to strengthen in 2025 and stay robust in 2026, driven by a lower saving rate, low inflation, and a gradual labour market recovery. Gross fixed capital formation is set to grow solidly from 2025, supported by easier financial conditions and a modest housing construction rebound. Government investment and higher real consumption will boost domestic demand in 2025, while foreign demand is projected to contribute less to growth. Overall, the IMF forecasts growth to pick up further to 1.5% in 2025 and 2.2% the following year.

Sweden is among the few advanced European economies to show both a current account surplus and low public debt. Amid weak growth and rising unemployment, the general government balance fell to an estimated -1.9% of GDP in 2024. With economic recovery, it is projected to improve to -1.4% in 2025 (EU Commission), driven by high defence and Ukraine aid spending and a central bank capital injection. By 2026, the balance is expected to near zero as tax revenues increase. The general government gross debt ratio is forecast to decline to 36.4% of GDP in 2024, 35.4% in 2025, and 34.4% in 2026, thanks to nominal GDP growth. In 2024, HICP inflation fell sharply to an average of 2.1%, down from nearly 6% in 2023, with all subcategories except services slowing significantly. This decline was driven by easing supply bottlenecks, a large negative output gap, lower energy prices, and an effective exchange rate recovery since mid-2023. Inflation is projected to drop further to 2% in 2025 (IMF).

The labour market remained relatively resilient to weak economic growth, partly due to a shift in domestic demand toward labour-intensive services, including health, ICT, restaurants, and hotels. In 2024, unemployment averaged 8.5% (from 7.7% one year earlier). Due to the usual lag between labour market trends and the broader economy, employment growth is expected to pick up in 2025, with the unemployment rate falling below 8% only in 2026 (IMF). Wage growth is projected to stay moderate amid declining inflation. Overall, Swedish citizens enjoy a high per capita GDP of USD 74,143 (PPP, 2024 - IMF), 14.6% higher than the EU’s average. The ratio of people at risk of poverty or social exclusion stood at 18.4% in 2023, compared to an EU average of 21.3% (European Commission).

 
Main Indicators 2023 (E)2024 (E)2025 (E)2026 (E)2027 (E)
GDP (billions USD) 584.91609.04638.78667.51698.08
GDP (Constant Prices, Annual % Change) -0.20.92.42.22.2
GDP per Capita (USD) 55,43357,21359,50861,70064,057
General Government Balance (in % of GDP) -0.5-0.5-0.00.40.4
General Government Gross Debt (in % of GDP) 36.436.435.434.433.3
Inflation Rate (%) 5.92.12.02.02.0
Unemployment Rate (% of the Labour Force) 7.78.58.38.07.7
Current Account (billions USD) 37.7640.3938.6938.4537.89
Current Account (in % of GDP) 6.56.66.15.85.4

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

Agriculture represents 1% 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). In 2024, the index of agricultural labour productivity increased by 22.5% y-o-y (data EU Commission).

The industrial sector contributes 23.3% of GDP and employs 17% 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 14% of GDP. The new technologies and biotechnologies sectors are also of significant importance in the economy. According to figures from Statistics Sweden, total orders in industry decreased by 2.9% year-on-year in 2024, with manufacturing orders losing 2.7%.

The tertiary sector, driven by telecommunications and IT equipment, employs 81% of the active workforce and contributes 65.2% of GDP. The banking sector is comprised of a total of 124 banks, including 42 commercial banks, 36 foreign banks, 44 savings banks and two cooperative banks; moreover, it employs around 44,500 people, accounts for 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: in 2023, Sweden received 7.53 million international tourists, marking a 1% increase compared to pre-pandemic levels.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 1.8 17.3 80.9
Value Added (in % of GDP) 1.0 23.3 65.2
Value Added (Annual % Change) -10.5 -2.6 0.9

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
Swedish Krona (SEK) - Average Annual Exchange Rate For 1 USD 8.568.558.699.509.21

Source: World Bank - Latest available data.

 

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Foreign Trade

The Swedish economy is very open to foreign trade, which represents 106% of its GDP (World Bank – latest data available). According to the latest data by Statistics Sweden, in the period between January and November 2024, the country mainly exported machinery and transport equipment (44.6%, mostly industrial machinery and road vehicles, at 14.4% and 14.3%, respectively), chemicals and rubber products (15.3%), minerals (10.3%), and wood and paper products (9.1%); whereas imports are led by machinery and transport equipment (43.8%, especially electronics and telecommunication items, at 16.1%), chemicals and rubber products (13.3%), food, beverage and tobacco (11.4%), and mineral fuels (10.3%).

In the same period, Germany and Norway were the top destinations for Swedish exports (10.3% and 9.7%, respectively), ahead of the U.S. (9%), Denmark, and Finland (6.7% each). Germany remained the largest supplier of goods to Sweden (16.1%), followed by the Netherlands (11%), Norway (10%), Denmark (6.6%), Finland and China (5% each). The European Union as a whole is Sweden's biggest trading partner and the country has a structural deficit from its trade with the EU, which accounted for 54.2% of exports and 66.9% of imports (data Statistics Sweden).

Sweden has a structurally positive trade balance: in 2023, the country recorded a trade surplus accounting for nearly 4% of its GDP (from 1.9% one year earlier - World Bank). In the same year, exports of goods stood at USD 197.8 billion (stable year-on-year), against USD 193 billion in imports (-4.5% y-o-y). As for services, exports grew by 10.5% (at USD 104.3 billion) with imports increasing at a slower pace (+7.5%), totalling USD 112.8 billion. According to provisional data from Statistics Sweden, in the period January–November 2024, the value of Swedish exports of goods amounted to SEK 1,897 billion, a decrease of 6% vis-à-vis 2023. At the same time, the value of imports of goods went down by 3% and amounted to SEK 1,836 billion.

 
Foreign Trade Values 20192020202120222023
Imports of Goods (million USD) 158,971149,985187,108202,171193,016
Exports of Goods (million USD) 160,576155,496189,524197,867197,860
Imports of Services (million USD) 74,94668,45890,057104,881112,819
Exports of Services (million USD) 77,90968,87888,67794,404104,353

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20192020202120222023
Foreign Trade (in % of GDP) 92.584.390.3105.9106.4
Trade Balance (million USD) 22,60525,85630,53623,56433,751
Trade Balance (Including Service) (million USD) 23,12523,84229,42114,10225,478
Imports of Goods and Services (Annual % Change) 2.0-6.312.89.7-1.1
Exports of Goods and Services (Annual % Change) 6.9-5.511.96.23.2
Imports of Goods and Services (in % of GDP) 44.340.143.052.051.2
Exports of Goods and Services (in % of GDP) 48.244.347.353.955.2

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20242025 (e)2026 (e)2027 (e)2028 (e)
Volume of exports of goods and services (Annual % change) 2.33.83.73.42.6
Volume of imports of goods and services (Annual % change) 0.73.42.53.03.0

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
Sweden is a member of the following international economic organisations: IMF, European Union, ICC, G-9, G-10, OECD, Schengen Convention, WTO, among others. For the full list of economic and other international organisations in which participates Sweden click here. International organisation membership of Sweden is also outlined here.
Free Trade Agreements
The up-to-date list of Free Trade Agreements signed by Sweden can be consulted here.
 

Main Partner Countries

Main Customers
(% of Exports)		 2023
Germany 10.3%
Norway 9.2%
United States 8.6%
Denmark 7.0%
Finland 6.9%
See More Countries 58.0%
Main Suppliers
(% of Imports)		 2023
Germany 16.7%
Netherlands 10.7%
Norway 10.3%
Denmark 6.4%
China 5.7%
See More Countries 50.2%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
King: CARL XVI GUSTAF (since September 1973) – hereditary
Prime Minister: Ulf KRISTERSSON (since 18 October 2022) - Moderate Party
Next Election Dates
Parliamentary: September 2026
Current Political Context
The latest general elections were held in Sweden on 11 September 2022. The Social Democratic Party received the most votes (30.3%), although the right-wing, anti-immigration party Sweden Democrats was the main winner of the elections, expanding its vote share from 5.7% in 2010 to 20.5%, becoming the second-largest party, just ahead of the liberal-conservative Moderate Party (19.1%). Despite her party receiving the most votes, Magdalena Andersson, the leader of the Social Democrats, decided to step down as prime minister. Following this decision, the parliament appointed the leader of the Moderate Party Ulf Kristersson as the new prime minister. Kristersson leads a right-wing government with the support of Christian Democrats, the Liberals and the far-right Sweden Democrats. Following the retirement of Foreign Minister Tobias Billström and the appointment of Jessika Roswall as European Commissioner, Swedish Prime Minister Ulf Kristersson reorganized the government in September 2024. Roswall was replaced as Minister of EU Affairs and Nordic Cooperation by Jessica Rosencrantz. Billström was replaced as Foreign Minister by Maria Malmer Stenergard. Johan Pehrson and Mats Persson also switched places as ministers of employment and education.
After Russia’s invasion of Ukraine, Sweden abandoned its tradition of neutrality and applied to become a member of NATO, although there were tensions with Turkey over Sweden’s protection of Kurdish refugees. Finally, at the end of 2023, the Turkish parliament's foreign affairs committee sent the request to the National Assembly for final approval. After another stall due to Hungary’s opposition, on 7 March 2024, Sweden finally became a full member of NATO.
Main Political Parties

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.

  • Social Democratic Party (SAP): centre-left, oldest and largest political party in Sweden; supports social democracy; its electoral base is among blue collar workers.
  • Moderate Party (M): centre-right; liberal-conservatism.
  • Sweden Democrats (SD): right-wing; anti-immigration; advocates social conservatism.
  • Centre Party (C): centre-right; ideology described as "eco-humanism,”; focuses on agricultural, environmental, and rural issues.
  • Left Party (V): left-wing; socialist and feminist.
  • Christian Democratis (KD): centre-right; looks to improve care of the elderly and family values; seeks to decrease corporate regulation and lowering taxes.
  • Liberals (L): centre-right; pushes for free market economy; supports the Eurozone, yet more recently has focused on gender equality issues and improving education.
  • Green Party: centre-left, based on green ideology.
Executive Power
Sweden is a constitutional monarchy with a hereditary monarch who serves as Head of State in a purely ceremonial role, with no political power. The Prime Minister, who holds executive authority as head of government, is nominated by the Speaker of the Riksdag after consulting party leaders and must be approved by Parliament. While the Prime Minister selects the Council of Ministers, there is no formal requirement for Parliament to approve individual ministers, though the government must maintain the confidence of the Riksdag. General elections determine the composition of Parliament, and the Prime Minister's term typically lasts four years, provided they retain parliamentary support.
Legislative Power
The Swedish legislative power is unicameral, vested in the Riksdag, a 349-seat Parliament whose members are elected every four years by universal suffrage through proportional representation. The government depends on the Riksdag's confidence, which can be expressed through votes of confidence. The Prime Minister has the authority to dissolve Parliament, even after a vote of no confidence, unless elections occurred within the past three months. Legislative power is shared between the government and Parliament, and Swedish citizens enjoy extensive political rights.
 

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