{ "title": "IMF Executive Board Concludes 2024 Article IV Consultation with Sweden", "publication": "IMF News, March 11, 2024", "sourceUrl": "https://www.imf.org/en/news/articles/2024/03/08/pr2480-sweden-imf-executive-board-concludes-2024-article-iv-consultation", "canonical": "https://www.imf.org/en/news/articles/2024/03/08/pr2480-sweden-imf-executive-board-concludes-2024-article-iv-consultation", "overlayPath": "/en/news/articles/2024/03/08/pr2480-sweden-imf-executive-board-concludes-2024-article-iv-consultation/index.md", "summary": "On March 7, 2024, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV Consultation with Sweden, and endorsed the staff appraisal without a meeting on a lapse-of-time basis.", "publishDate": "2024-03-11", "sections": [ { "heading": "Overview", "content": "- On March 7, 2024, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV Consultation with Sweden and endorsed the staff appraisal without a meeting on a lapse-of-time basis.\n- GDP is estimated to have declined by 0.3 percent in 2023, after a strong post-pandemic rebound.\n- Activity is expected to remain subdued during 2024 and pick up gradually thereafter." }, { "heading": "Economic outlook and growth projections", "content": "- Growth is projected to average 0.2 percent in 2024.\n- Growth is projected to average 2.3 percent in 2025.\n- Balance of risks to growth: tilted to the downside, with the main risk from larger-than-projected effects from tight financial conditions.\n- Uncertainty around the outlook: described as high." }, { "heading": "Inflation and monetary policy", "content": "- Inflation has been declining at a faster clip in recent months, largely driven by energy prices.\n- HICP core inflation was 5 percent y/y in December 2023.\n- Inflation is expected to average 2.6 percent in 2024.\n- Inflation is expected to return to the target by mid-2025.\n- Monetary policy stance: described as appropriately restrictive and advised to remain in place during the first half of 2024 to ensure inflation returns to target.\n- The Riksbank should remain ready to adjust monetary policy settings if risks to the inflation outlook materialize on either side and continue clear, forward-looking communication to anchor inflation expectations." }, { "heading": "Labor market, credit, and financial sector conditions", "content": "- Labor market: showing signs of cooling; employment growth has moderated.\n- Wage growth: modest.\n- Private credit: declining.\n- Real estate and equity prices: have fallen from their 2022 peaks.\n- Corporate bankruptcies: have picked up sharply.\n- Commercial real estate (CRE) sector: severely hit, with highly leveraged and lowered-rated firms experiencing significant deterioration in debt-carrying capacity indicators.\n- Banking system: remains resilient with strong profitability and sizeable capital and liquidity buffers." }, { "heading": "Macroprudential policy and financial stability recommendations", "content": "- Macroprudential policy settings: should remain tight amid elevated systemic risks.\n- Main sources of systemic risk: elevated levels of debt and high financial sector exposure to both RRE and CRE risks.\n- Policy actions noted as timely: increase in the CCyB and the extension of risk weight floors for banks’ RE and CRE loan exposures to further enhance bank resilience.\n- Recommended further actions:\n - Improve collection of granular household balance sheet data and standardized disclosures for the CRE sector.\n - Continue to improve risk analyses and increase onsite and intrusive supervision.\n - Continue strengthening crisis management strategies.\n - Over the medium term, introduce higher capital requirements on banks’ CRE exposures to contain systemic risks.\n - Tighten borrower-based measures (BBMs) to contain risks related to high household debt.\n - Continue improvements to the AML/CFT framework to support financial stability." }, { "heading": "Fiscal policy assessment", "content": "- The planned broadly neutral fiscal policy stance in 2024 is appropriate.\n- The 2024 budget includes well-targeted measures to support vulnerable populations.\n- If the recession deepens, substantial fiscal space is available for further fiscal support; such measures should be well designed to avoid inflationary pressures and targeted towards the vulnerable.\n- Sweden’s strong fiscal framework has underpinned sustainable public finances.\n- Medium-term fiscal needs: address structural and demographic-related spending pressures and new investment needs to support the green transition.\n- Other fiscal priorities recommended:\n - Tax reforms to rationalize dividend taxation.\n - Lower labor income taxes.\n - Reduce interest tax deductibility.\n - Improve property taxation.\n- A small deviation from the surplus target, while preserving the key elements of the framework, could allow financing for growth-enhancing public investment and social spending over the medium term." }, { "heading": "Structural reforms and climate transition", "content": "- Structural reforms recommended to strengthen medium-term growth, social inclusion, and the green transition:\n - Upskilling and education opportunities.\n - Strengthening working incentives.\n - Bolstering active labor market policies, tailored training, and reskilling programs to address skill gaps and mismatches.\n - Addressing housing market challenges by easing restrictions on new construction (including building and permit regulations) and easing rent control to raise housing supply and encourage labor mobility.\n - Increasing supply of renewable energy and green infrastructure; more measures will be needed to meet Sweden’s ambitious climate goal targets." }, { "heading": "Executive Board Assessment (summary of endorsement)", "content": "- The near-term economic outlook is subdued.\n- Growth: projected average of 0.2 percent in 2024 and 2.3 percent in 2025.\n- Inflation: expected to average 2.6 percent in 2024 and reach target by mid-2025.\n- Monetary policy: appropriately restrictive; remain in place during first half of 2024; Riksbank should be ready to adjust and communicate clearly.\n- Macroprudential: remain tight; monitor systemic risks, continue FSAP recommendations, and consider higher capital requirements on CRE exposures and tighter BBMs.\n- Fiscal policy: broadly neutral stance in 2024 appropriate; use fiscal space if needed with well-targeted measures.\n- Structural reforms: important for medium-term growth, inclusion, and green transition." }, { "heading": "Key statistics and selected indicators (2021–29, as presented)", "content": "- Real GDP: 2021: 6.1; 2022: 2.9; 2023: -0.3; 2024: 0.2; 2025: 2.3; 2026: 2.2; 2027: 2.1.\n- Final domestic demand: 2021: 5.7; 2022: 2.4; 2023: -0.6; 2024: 0.5; 2025: 1.9; 2026: 1.8.\n- Private consumption: 2021: 6.3; 2022: -1.7; 2023: 1.1.\n- Public consumption: 2021: 3.3; 2022: -0.1; 2023: 1.2; 2024: 1.0.\n- Gross fixed investment: 2021: 7.1; 2022: 6.0; 2023: -1.5; 2024: -1.2; 2025: 2.0; 2026: 1.7.\n- Exports of G&S: 2021: 11.1; 2022: 7.3; 2023: 2.7; 2024: 3.2; 2025: 3.5.\n- Imports of G&S: 2021: 11.6; 2022: 9.2; 2023: -0.4; 2024: 0.9; 2025: 2.6; 2026: 3.0.\n- HICP inflation (average): 2021: 8.1; 2022: 5.9.\n- HICP inflation (Q4 on Q4): 2021: 3.9; 2022: 10.3.\n- HICP core inflation (average): 2021: 1.6; 2022: 5.5; 2023: 7.4.\n- HICP core inflation (Q4 on Q4): 2021: 7.8; 2022: 5.3.\n- Unemployment rate (percent): 2021: 8.9; 2022: 7.5; 2023: 7.7; 2024: 8.4; 2025: 8.2.\n- Gross national saving (percent of GDP): 2021: 32.9; 2022: 34.2; 2023: 33.1; 2024: 32.6; 2025: 33.0; 2026: 33.3; 2027: 33.5; 2028: 33.4; 2029: 33.6.\n- Gross domestic investment (percent of GDP): 2021: 25.9; 2022: 28.3; 2023: 27.0; 2024: 26.6; 2025: 27.7; 2026: 28.6; 2027: 29.1; 2028: 29.4; 2029: 29.6.\n- Output gap (percent of potential): 2021: 1.5; 2022: -0.2; 2023: -0.9; 2024: 0.0.\n- Total revenues (percent of GDP): 2021: 48.1; 2022: 47.1; 2023: 47.4; 2024: 47.9; 2025: 48.9.\n- Total expenditures (percent of GDP): 2021: 46.8; 2022: 47.2; 2023: 48.0; 2024: 48.6.\n- Net acquisition of nonfinancial assets (percent of GDP): 2021: 1.3; 2022: 1.4.\n- Net lending (percent of GDP): 2021: -0.7.\n- Structural balance (as a percent of potential GDP): 2021: -0.5; 2022: 0.4.\n- General government gross debt, official statistics (percent of GDP): 2021: 36.5; 2022: 34.0; 2023: 34.5; 2024: 32.4; 2025: 31.3; 2026: 30.3.\n- M3 (year-on-year, percent change, eop): 2021: 10.7; 2022: -1.4.\n- Bank lending to households (year-on-year, percent change, eop): 2021: 6.7.\n- Policy rate (percent, end of period): 2021: 2.5; 2022: 4.0.\n- Ten-year government bond yield (percent, end of period): (value not listed explicitly in source table).\n- Mortgage lending rate (percent, end of period): 2021: 3.4; 2022: 4.7.\n- Current account (percent of GDP): 2021: 5.8; 2022: 4.4.\n- Net international investment position (percent of GDP): 2021: 19.0; 2022: 30.9; 2023: 31.7; 2024: 34.1; 2025: 34.6; 2026: 35.1.\n- Exchange rate (period average): SEK per euro: 2021: 11.0; 2022: 11.2.\n- SEK per U.S. dollar: 2021: 9.1; 2022: 10.4.\n- Nominal effective rate (2010=100): 2021: 93.7; 2022: 88.0; 2023: 83.0.\n- Real effective rate (ULC) (2010=100): 2021: 96.8; 2022: 89.9; 2023: 84.4.\n- REER ULC long run average deviation: 2021: -5.5; 2022: -11.9; 2023: -16.8.\n- Real effective rate (CPI) (2010=100): 2021: 90.3; 2022: 84.8; 2023: 83.1.\n- Fund Position (December 31, 2023): Quota (in millions of SDRs): 4,430.\n- Reserve tranche position (in percent of quota): 28.2.\n- Holdings of SDRs (in percent of allocation): 105.2.\n- Memorandum items: GDP per Capita (2022, USD): 65,496; Population (2022, million): 10.5.\n- Key Export Markets: Germany, Norway, and Netherlands.\n\nIMF Communications Department press release, March 11, 2024.\n\n---\n\n\n References\n\n- Sweden and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2024/03/08/pr2480-sweden-imf-executive-board-concludes-2024-article-iv-consultation" } ], "bullets": [ "[Markdown version](/en/news/articles/2024/03/08/pr2480-sweden-imf-executive-board-concludes-2024-article-iv-consultation/index.md)", "[Structured JSON version](/en/news/articles/2024/03/08/pr2480-sweden-imf-executive-board-concludes-2024-article-iv-consultation/index.json)", "[Bundle manifest](/en/news/articles/2024/03/08/pr2480-sweden-imf-executive-board-concludes-2024-article-iv-consultation/bundle-manifest.json)", "Published: March 11, 2024", "On March 7, 2024, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV Consultation with Sweden and endorsed the staff appraisal without a meeting on a lapse-of-time basis.", "GDP is estimated to have declined by 0.3 percent in 2023, after a strong post-pandemic rebound.", "Activity is expected to remain subdued during 2024 and pick up gradually thereafter.", "Growth is projected to average 0.2 percent in 2024.", "Growth is projected to average 2.3 percent in 2025.", "Balance of risks to growth: tilted to the downside, with the main risk from larger-than-projected effects from tight financial conditions.", "Uncertainty around the outlook: described as high.", "Inflation has been declining at a faster clip in recent months, largely driven by energy prices.", "HICP core inflation was 5 percent y/y in December 2023.", "Inflation is expected to average 2.6 percent in 2024.", "Inflation is expected to return to the target by mid-2025.", "Monetary policy stance: described as appropriately restrictive and advised to remain in place during the first half of 2024 to ensure inflation returns to target.", "The Riksbank should remain ready to adjust monetary policy settings if risks to the inflation outlook materialize on either side and continue clear, forward-looking communication to anchor inflation expectations.", "Labor market: showing signs of cooling; employment growth has moderated.", "Wage growth: modest.", "Private credit: declining.", "Real estate and equity prices: have fallen from their 2022 peaks.", "Corporate bankruptcies: have picked up sharply.", "Commercial real estate (CRE) sector: severely hit, with highly leveraged and lowered-rated firms experiencing significant deterioration in debt-carrying capacity indicators.", "Banking system: remains resilient with strong profitability and sizeable capital and liquidity buffers.", "Macroprudential policy settings: should remain tight amid elevated systemic risks.", "Main sources of systemic risk: elevated levels of debt and high financial sector exposure to both RRE and CRE risks.", "Policy actions noted as timely: increase in the CCyB and the extension of risk weight floors for banks’ RE and CRE loan exposures to further enhance bank resilience.", "Recommended further actions:", "The planned broadly neutral fiscal policy stance in 2024 is appropriate.", "The 2024 budget includes well-targeted measures to support vulnerable populations.", "If the recession deepens, substantial fiscal space is available for further fiscal support; such measures should be well designed to avoid inflationary pressures and targeted towards the vulnerable.", "Sweden’s strong fiscal framework has underpinned sustainable public finances.", "Medium-term fiscal needs: address structural and demographic-related spending pressures and new investment needs to support the green transition.", "Other fiscal priorities recommended:", "A small deviation from the surplus target, while preserving the key elements of the framework, could allow financing for growth-enhancing public investment and social spending over the medium term.", "Structural reforms recommended to strengthen medium-term growth, social inclusion, and the green transition:", "The near-term economic outlook is subdued.", "Growth: projected average of 0.2 percent in 2024 and 2.3 percent in 2025.", "Inflation: expected to average 2.6 percent in 2024 and reach target by mid-2025.", "Monetary policy: appropriately restrictive; remain in place during first half of 2024; Riksbank should be ready to adjust and communicate clearly.", "Macroprudential: remain tight; monitor systemic risks, continue FSAP recommendations, and consider higher capital requirements on CRE exposures and tighter BBMs.", "Fiscal policy: broadly neutral stance in 2024 appropriate; use fiscal space if needed with well-targeted measures.", "Structural reforms: important for medium-term growth, inclusion, and green transition.", "Real GDP: 2021: 6.1; 2022: 2.9; 2023: -0.3; 2024: 0.2; 2025: 2.3; 2026: 2.2; 2027: 2.1.", "Final domestic demand: 2021: 5.7; 2022: 2.4; 2023: -0.6; 2024: 0.5; 2025: 1.9; 2026: 1.8.", "Private consumption: 2021: 6.3; 2022: -1.7; 2023: 1.1.", "Public consumption: 2021: 3.3; 2022: -0.1; 2023: 1.2; 2024: 1.0.", "Gross fixed investment: 2021: 7.1; 2022: 6.0; 2023: -1.5; 2024: -1.2; 2025: 2.0; 2026: 1.7.", "Exports of G&S: 2021: 11.1; 2022: 7.3; 2023: 2.7; 2024: 3.2; 2025: 3.5.", "Imports of G&S: 2021: 11.6; 2022: 9.2; 2023: -0.4; 2024: 0.9; 2025: 2.6; 2026: 3.0.", "HICP inflation (average): 2021: 8.1; 2022: 5.9.", "HICP inflation (Q4 on Q4): 2021: 3.9; 2022: 10.3.", "HICP core inflation (average): 2021: 1.6; 2022: 5.5; 2023: 7.4.", "HICP core inflation (Q4 on Q4): 2021: 7.8; 2022: 5.3.", "Unemployment rate (percent): 2021: 8.9; 2022: 7.5; 2023: 7.7; 2024: 8.4; 2025: 8.2.", "Gross national saving (percent of GDP): 2021: 32.9; 2022: 34.2; 2023: 33.1; 2024: 32.6; 2025: 33.0; 2026: 33.3; 2027: 33.5; 2028: 33.4; 2029: 33.6.", "Gross domestic investment (percent of GDP): 2021: 25.9; 2022: 28.3; 2023: 27.0; 2024: 26.6; 2025: 27.7; 2026: 28.6; 2027: 29.1; 2028: 29.4; 2029: 29.6.", "Output gap (percent of potential): 2021: 1.5; 2022: -0.2; 2023: -0.9; 2024: 0.0.", "Total revenues (percent of GDP): 2021: 48.1; 2022: 47.1; 2023: 47.4; 2024: 47.9; 2025: 48.9.", "Total expenditures (percent of GDP): 2021: 46.8; 2022: 47.2; 2023: 48.0; 2024: 48.6.", "Net acquisition of nonfinancial assets (percent of GDP): 2021: 1.3; 2022: 1.4.", "Net lending (percent of GDP): 2021: -0.7.", "Structural balance (as a percent of potential GDP): 2021: -0.5; 2022: 0.4.", "General government gross debt, official statistics (percent of GDP): 2021: 36.5; 2022: 34.0; 2023: 34.5; 2024: 32.4; 2025: 31.3; 2026: 30.3.", "M3 (year-on-year, percent change, eop): 2021: 10.7; 2022: -1.4.", "Bank lending to households (year-on-year, percent change, eop): 2021: 6.7.", "Policy rate (percent, end of period): 2021: 2.5; 2022: 4.0.", "Ten-year government bond yield (percent, end of period): (value not listed explicitly in source table).", "Mortgage lending rate (percent, end of period): 2021: 3.4; 2022: 4.7.", "Current account (percent of GDP): 2021: 5.8; 2022: 4.4.", "Net international investment position (percent of GDP): 2021: 19.0; 2022: 30.9; 2023: 31.7; 2024: 34.1; 2025: 34.6; 2026: 35.1.", "Exchange rate (period average): SEK per euro: 2021: 11.0; 2022: 11.2.", "SEK per U.S. dollar: 2021: 9.1; 2022: 10.4.", "Nominal effective rate (2010=100): 2021: 93.7; 2022: 88.0; 2023: 83.0.", "Real effective rate (ULC) (2010=100): 2021: 96.8; 2022: 89.9; 2023: 84.4.", "REER ULC long run average deviation: 2021: -5.5; 2022: -11.9; 2023: -16.8.", "Real effective rate (CPI) (2010=100): 2021: 90.3; 2022: 84.8; 2023: 83.1.", "Fund Position (December 31, 2023): Quota (in millions of SDRs): 4,430.", "Reserve tranche position (in percent of quota): 28.2.", "Holdings of SDRs (in percent of allocation): 105.2.", "Memorandum items: GDP per Capita (2022, USD): 65,496; Population (2022, million): 10.5.", "Key Export Markets: Germany, Norway, and Netherlands.", "[Sweden and the IMF](http://www.imf.org/external/country/SWE/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2024/03/08/pr2480-sweden-imf-executive-board-concludes-2024-article-iv-consultation/index.md", "json": "/en/news/articles/2024/03/08/pr2480-sweden-imf-executive-board-concludes-2024-article-iv-consultation/index.json", "bundleManifest": "/en/news/articles/2024/03/08/pr2480-sweden-imf-executive-board-concludes-2024-article-iv-consultation/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T02:49:01.202Z" }