The Swedish economy has made a strong recovery in the wake of the pandemic and the growth outlook for this year is fundamentally stable. Nevertheless, Russia’s invasion of Ukraine is expected to impact economic growth both in Sweden and in the rest of the world. Growth is expected to be lower than would otherwise have been the case, while inflation is expected to be higher. However, the Swedish economy is resilient thanks to strong public finances, and the labour market situation has improved in the early part of this year.

“We are constantly evaluating the impact on the Swedish economy. Russia’s unjustifiable invasion of Ukraine affects Sweden by pushing up prices, especially for energy and food. Low-income households are hit particularly hard by rising prices. No politician can promise to compensate for everything, but we have shown that we won’t leave ordinary people in the lurch,” says Minister for Finance Mikael Damberg.

Russia’s invasion of Ukraine impacts the Swedish economy and the global economy, including through rising energy and food prices, reduced trade and increased uncertainty in financial markets. This leads to a fall in exports, consumption and investments. The effects are partly counteracted by increased government consumption.

“There is significant economic uncertainty, but the Government is closely monitoring developments and considering several different scenarios. With strong public finances, we stand ready to strengthen Sweden,” says Minister for Finance Mikael Damberg.

Inflation, which rose markedly last year, is set to rise further, driven mainly by continuing high energy and food prices. However, it is uncertain how long high inflation will last.

In Sweden, labour market developments have clearly improved, and the employment rate is now higher than before the pandemic broke out. Employment is expected to continue growing at a rapid rate this year and unemployment to fall slightly faster this year than expected in the previous forecast.

General government net lending is expected to be in surplus in 2023 and to strengthen further 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, which means that the Swedish economy is resilient.