“Sweden is a strong knowledge-based economy, well integrated in global value chains, which ensures high standards of living, well-being, income and gender equality, as well as a high environmental quality to its inhabitants. Growth has been broad-based over the past five years, with consumption, investment and exports all contributing significantly. Meanwhile, strong domestic demand has pushed up imports (Figure 1).
“Measures of the output gap and indicators of capacity utilisation suggest the economy is operating close to full capacity (Figure 2). Even so, monetary policy remains expansionary, while fiscal policy is slightly expansionary.
“Sweden’s employment rate is the highest in the European Union, reflecting the strength of the economy, high participation of women and labour market institutions generating strong work incentives (Figure 3). Labour shortages appear in various economic sectors, even though the unemployment rate remains higher than the OECD average (Figure 4). Unemployment is now concentrated among the most vulnerable groups, notably the low-skilled and immigrants, which makes further reductions more challenging, notwithstanding some recent progress.
“Productivity growth is among the highest in the OECD, even though it has slowed over the past decade, following the global trend. Nevertheless, it is uneven across sectors, and there is scope for improvement, particularly in sectors with relatively limited exposure to foreign competition. Early adoption and diffusion of technology can foster productivity growth, raise competitiveness and provide the opportunity to develop new economic processes, which could lift well-being, as well as help tackle essential issues such as climate change and the consequences of population ageing. However, it also raises concerns that many jobs could be at risk of automation, with consequences for employment, skills requirements, social protection and income inequality.”
Source: OECD (2019), OECD Economic Surveys: Sweden 2019, OECD Publishing, Paris.