Sweden: Fighting the housing bubble

​The Swedish economy has enjoyed a robust growth since 2014, especially compared to Eurozone countries. Growth was mainly driven by domestic demand. Additionally, in 2015 and early 2016, the mass arrival of migrants prompted government spending. This further stimulated consumption and job creation and unemployment stood at 6.9% in October 2016 down from 7.4% on average in 2015. 


EH expects growth above +3% in 2016. It may slow down to +2.4% and +2.6% in 2017 and 2018 (see Figure 1.) Long-term growth potential hinges on the integration of migrant workers despite labor market rigidities. Another key is continued success in converting high R&D spending (3.2% of GDP) into job opportunities and productivity growth. 


Yet the careful macroeconomic management of vulnerabilities such as deflation and household debt might prove to be the most important challenge for the Swedish economy. 


sweden-country-report-dec16.pdfsweden-country-report-dec16.pdf