Sweden GDP growth forecast raised to 2.9 percent by LO economists

Economists from LO have raised their GDP growth forecast for Sweden to 2.9 percent for 2026, up from a previous estimate of 2.4 percent. Despite this improved growth outlook and a recovery in the Swedish economy, experts warn that unemployment remains high. LO's chief economist, Torbjörn Hållö, cautioned against rapid tightening of fiscal and monetary policies that could hinder the economic recovery.

Regarding inflation, LO expects a slight increase in the near term due to the phasing out of temporary fiscal measures, but estimates inflation for 2027 to be around 2.4 percent once these effects are removed. Hållö noted that because inflation is expected to land near target levels, there is no immediate reason for the Riksbank to implement major interest rate hikes.

Complementary data from SCB indicates that the Swedish economy showed strong momentum in August, with GDP growing by 1.1 percent compared to July, doubling economist expectations. This growth was driven by increased household consumption and a significant 5.4 percent rise in industrial production, particularly within the motor vehicle industry.