## Sweden: Selected Issues

_IMF Staff Country Reports, March 11, 2024_

## Source details

**Canonical URL:** [Sweden: Selected Issues](https://www.imf.org/en/publications/cr/issues/2024/03/08/sweden-selected-issues-546069)

## Other formats

- [Markdown version](/en/publications/cr/issues/2024/03/08/sweden-selected-issues-546069/index.md)
- [Structured JSON version](/en/publications/cr/issues/2024/03/08/sweden-selected-issues-546069/index.json)
- [Bundle manifest](/en/publications/cr/issues/2024/03/08/sweden-selected-issues-546069/bundle-manifest.json)

## Bibliographic details
- Published: March 11, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400270215.002

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### Inflation developments and drivers
- Inflation in Sweden started rising sharply from June 2022.
- The paper analyzes inflation developments, drivers, and risks in Sweden using a Sweden-specific Phillips curve (PC).
- Dynamic simulations of the estimated PC are used to assess the role of external factors in driving recent inflation.
- Growth in the gross domestic product deflator (as one measure of inflation) can be decomposed into three components—profits, labor costs, and taxes—to assess inflationary pressures in the economy.

### Unexplained inflation and factors outside the PC
- Several factors that are poorly captured in the PC analysis may account for the rise in unexplained inflation.
- Core inflation could be sticker if the price setting becomes de-anchored or more backward looking.
- Increasing inflation expectations, including because of renewed exchange rate pressures, would feed into higher inflation.

### Risk scenarios and channels
- Illustrative risk scenarios confirm a wide range of possible inflation paths in either direction.
- Specific risks identified that could delay the return of inflation to target:
  - Renewed commodity price shocks.
  - Smaller-than-estimated slack in the economy.
  - Renewed exchange rate pressures that raise inflation expectations.
- Channels emphasized:
  - External factors (assessed via the PC dynamics).
  - Domestic price-setting behavior and expectations.
  - Decomposition into profits, labor costs, and taxes as transmission channels for inflationary pressures.

### Methodology and scope
- Uses dynamic simulations of an estimated Sweden-specific Phillips curve (PC).
- Complements PC analysis with decomposition of GDP deflator growth into profits, labor costs, and taxes.

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## Content in this bundle

- **Sweden: Selected Issues; IMF Country Report No. 24/71; February 20, 2024**
  - [Sweden: Selected Issues; IMF Country Report No. 24/71; February 20, 2024 (Markdown version)](/-/media/files/publications/cr/2024/english/1sweea2024002.pdf.md){rel="alternate" type="text/markdown"}
  - [Sweden: Selected Issues; IMF Country Report No. 24/71; February 20, 2024 (PDF)](/-/media/files/publications/cr/2024/english/1sweea2024002.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2024/03/08/sweden-selected-issues-546069_