Economic growth rises in the third quarter of 2025

Economy picks up speed in Q3: Sweden's GDP increased 1.1% in seasonally and calendar-adjusted quarter-on-quarter terms in Q3, following a 0.8% expansion in the prior quarter. Q3's reading was the strongest since Q1 2024 and exceeded market expectations. On a calendar-adjusted year-on-year basis, GDP expanded 2.5% in Q3, following 2.0% growth in the prior quarter.

GDP growth records broad-based upturn: Compared to the prior period's data, readings in Q3 improved for private consumption (+0.8% on a seasonally adjusted quarter-on-quarter basis vs +0.4% in Q2), government consumption (+0.3% vs +0.2% in Q2) and exports of goods and services (+1.8% vs +1.3% in Q2). In contrast, readings softened for imports of goods and services (+0.8% vs +2.9% in Q2) and fixed investment (+1.9% vs +2.0% in Q2); the latter remained solid, buttressed by investment in machinery and equipment, as well as weapons systems and real estate. As such, the acceleration was mainly broad-based, yet high imports of services and softer inventory build-up throughout the quarter capped the expansion.

2026 economic outlook is bright: In Q4, sequential GDP growth is set to broadly halve from Q3’s strong level, before stabilizing through Q4 2026. Looking at 2026 as a whole, GDP growth is set to accelerate to a five-year high, bolstered by domestic demand, which should benefit from past monetary policy loosening and supportive fiscal policy. That said, momentum will be capped by the external sector, as U.S. tariffs and trade uncertainty should weigh on exports next year—Sweden is among the most exposed EU economies to U.S. trade. German fiscal stimulus and EU defense efforts are key to monitor.

Panelist insight: Commenting on the Q3 reading, economists at Nordea noted: “Indicators point to healthy growth also in Q4, although the quarterly growth rate will probably be lower than in Q3. This will in turn boost the demand for labour. In other words, the long-awaited recovery has started and is so far stronger than expected. The improved growth outlook will make the Riksbank stay on hold at 1.75%, despite soft inflation.”

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