After two years in recession, Sweden is finally showing signs of life. The National Institute of Economic Research (KI) now expects growth to turn positive before 2025 is out, even if the pace remains slow.
Recent figures from credit agency UC also point to a shift: bankruptcies are falling for the first time since 2022.
“We expect the economy to move in a positive direction. This is not an economic crisis,” says KI’s Director General, Albin Kainelainen.
Why the mood is changing
Lower interest rates, easing prices, and rising household incomes are expected to fuel more spending in the second half of the year. KI projects GDP growth of 0.7 percent for 2025, down from its June forecast of 0.9 percent after consumer spending came in weaker than expected this spring.
“The first half was weak, but we see growth picking up in the second. It’s just not enough to make the full year strong,” Kainelainen says.
Jobs will lag the recovery
Unemployment is stuck at 8.7 percent and is expected to stay high well into 2026. Companies shed fewer workers than usual during the downturn, which means they are in no rush to hire as demand returns. Historically, employment gains trail GDP growth in recoveries.
Bankruptcies ease after years of increases
Corporate bankruptcies totalled 6,168 from January to July this year—down from 6,407 in the same period last year. Retail, one of the hardest-hit sectors, has finally stopped seeing year-on-year increases in closures.
One survivor is Peter Kaufmann’s gaming store in Norrtälje. Years ago, he pivoted from selling physical games to offering an in-store experience built around community and interaction. The approach worked, though it left the business exposed to inflation. “We built what we have today, and it’s what carried us through,” Kaufmann says.
Key Forecasts: Sweden’s Economy
(Percentage change unless otherwise noted)
- GDP: 2025 +0.7 | 2026 +2.6
- Unemployment: 2025 8.7 | 2026 8.4
- Inflation (CPIF): 2025 2.5 | 2026 1.6
- Key interest rate (year-end): 2025 1.75 | 2026 1.75
- Hourly wage growth: 2025 +3.6 | 2026 +3.5
Corporate Bankruptcies, Jan–July
- 2022: 3,418
- 2023: 4,612
- 2024: 6,407
- 2025: 6,168
Retail Bankruptcies, Year-on-Year Change
- 2022: +16%
- 2023: +28%
- 2024: +3%
- 2025: 0%
Bottom line: Sweden’s economy is past the worst, but the turnaround will be gradual. Growth will arrive before job gains, and while fewer companies are failing, the recovery still has work to do.