What happened to the forecasts for 2026?

At the beginning of 2026, there was a fairly clear picture of how the Swedish economy would develop. Inflation was expected to fall, the policy rate to remain unchanged and improving household purchasing power to help Sweden move further out of the economic downturn. After several years of rapidly rising prices and high interest rates, the economy was expected to begin returning to something more normal.

Now that much of the year has passed, we can conclude that the forecasters were broadly correct. The policy rate remains at 1.75%, inflation is low and the Swedish economy is showing signs of recovery. Household consumption and confidence have strengthened, although unemployment remains high and economic development has been uneven. At the same time, the journey to this point has been considerably more dramatic than most expected.

Right about the policy rate, but new risks have emerged

So far, the Riksbank has acted largely as expected and kept the policy rate unchanged. At the beginning of the year, the discussion mainly focused on whether the Swedish economy would recover quickly enough and whether another policy rate cut might be needed.

During the year, the balance of risks has changed. The conflict in the Middle East and the uncertainty surrounding Iran and the Strait of Hormuz have affected energy and transport costs. This has raised the question of whether inflation could begin to rise again, even though measured inflation in Sweden remains low.

The Riksbank must therefore weigh two risks against each other. A policy rate increase could slow a recovery that is not yet fully established. However, if higher energy, freight and input costs spread through the wider economy, the policy rate may need to be raised to keep inflation under control.

Forecasters now appear to broadly agree that the next significant policy rate move will be upwards. However, they disagree about the timing. Some expect an increase towards the end of 2026, while others believe that the Riksbank will wait until the spring of 2027.

A recovery, but how strong will it be?

The Swedish economy has also developed broadly in line with expectations, although not in a straight line. The year began weakly before the economy gained momentum during the second quarter. Household consumption has increased and confidence has improved, but the labour market remains weak.

Opinions therefore differ on how strong the recovery will actually be. The latest forecasts still point to growth in both 2026 and 2027, but the assessments vary considerably. Some foresee a relatively rapid recovery, while others expect more modest growth.

Much could still change

Economic developments over the coming year will not depend solely on the policy rate and economic data. Sweden’s parliamentary election could affect taxes, public spending and the amount of disposable income available to households. Expansionary economic policy could strengthen consumption, but it could also increase inflationary pressure and influence the Riksbank’s decisions.

The US midterm elections could also matter to Swedish households and investors. The result will affect the president’s ability to pursue policies concerning taxes, public spending and trade tariffs. This could, in turn, have consequences for global trade, the Swedish krona and financial markets.

Developments in the Middle East will also be important. An escalation could push energy and transport costs even higher, while easing tensions could reduce inflation and give central banks greater room to manoeuvre.

The main scenario remains a continued recovery in the Swedish economy, followed eventually by a somewhat higher policy rate. However, 2026 has already shown that forecasters can be broadly correct about the destination, even when the journey turns out to be entirely different from what they expected.