The Swedish economy

Sweden's economy today

Since the beginning of 2022, Sweden's GDP has grown by almost 7 per cent, compared with around 5 per cent across the EU, and the country has one of the highest GDPs per capita in Europe and the OECD.

The country's national debt-to-GDP ratio is among Europe’s lowest, and after experiencing a surge in inflation during 2022–2024, Sweden has returned to a period of comparatively low inflation.

This strong position is reflected in Sweden's creditworthiness. All four leading credit rating agencies give Sweden their highest credit rating, which is rare even among developed economies.

Sweden's economy is currently performing comparatively well. However, this has not always been the case. Like most countries, Sweden has experienced periods of economic difficulty and major reform.

Openness makes the Swedish economy competitive

Sweden has a long history of trading with other countries, and openness to international markets has helped make its export-oriented economy competitive.

The World Bank has singled out openness and a liberal approach to trade and doing business as key features of the Swedish economy.

Sweden typically maintains a trade surplus, meaning that the value of exported goods and services exceeds the value of imports (link with chart in Swedish).  

Germany is Sweden's largest export market (link in Swedish), followed by Norway and the US.

Services drive Sweden's economy, goods drive exports

Sweden is primarily a service-based economy, with services accounting for around two-thirds of GDP.

Since the early 2000s, growth has been particularly strong in knowledge-intensive sectors such as information and communications technology (ICT), finance and business services. Behind this lies a strong focus on innovation. Every year, Sweden invests more than 3 per cent of its GDP in research and development (R&D), with much of the funding coming from the private sector.

Thanks in part to its innovation system, Sweden has also gained a reputation as one of Europe's leading startup hubs and has produced numerous so-called unicorns, privately held companies valued at more than USD 1 billion.

Sweden's exports, however, remain weighted more towards goods than services. Among the major export products are machinery and transport equipment, chemicals and pharmaceuticals, forest products such as timber, pulp and paper, and iron and steel.

From crisis to reform

The Swedish economy has been relatively stable over the last few decades and has, on the whole, grown steadily since 1970. But there have been challenging times in between.

In the late 1980s and early 1990s, the Swedish economy suffered from low growth and high inflation, and the Swedish krona was repeatedly devalued.

During the severe financial crisis in the early 1990s, Swedish banks became unstable and two were nationalised, unemployment rose sharply and government spending soared, as did national debt.

The path back to stability was not easy. But by pursuing reforms – and sticking to them – Sweden transformed its economy, paving the way for robust growth in the face of global economic uncertainty.

Public finances and financial stability

Since the crisis of the 1990s, successive Swedish governments have managed to keep public spending under control, including during the 2008 global financial crisis. This has largely been made possible by fiscal regulations introduced in the 1990s.

In 1996, Sweden introduced a ceiling for public spending (utgiftstak). This was accompanied by a ‘surplus goal’ (överskottsmål), where public financial savings are measured in relation to GDP over a business cycle.

These reforms have helped prevent the accumulation of debt and ensure that the national debt is kept in check. 

In 2019, Sweden introduced the 'debt anchor' (skuldankare) as a complement aimed at keeping long-term debt at 35 per cent of GDP. That same year, Sweden’s surplus goal was lowered from 1 per cent to 0.33 per cent.

In 2024, the government announced plans to replace the surplus goal with a balanced budget target (balansmål) in 2027. Under the new framework, Sweden intends public finances to balance over an economic cycle rather than show a surplus.

Capital markets play a key role in Sweden

According to the OECD, Sweden has one of the EU's most active equity markets. Sweden also has the highest number of listed companies in the EU. 

Household participation in capital markets is high by European standards, and smaller Swedish companies rely on public markets to a greater extent than in many comparable countries.

In a 2025 report, the Swedish government estimated that just over 10 per cent of households’ financial assets were held in cash or bank deposits – the lowest share in the EU – with the rest invested in various forms of financial instruments and products.

Interestingly, Sweden’s public pension funds are major investors in global stock markets. This gives them a chance to tap into economic growth and innovation around the world.