Is Sweden's rapid economic recovery bad news?

"Sweden's economy is growing much faster than expected, which experts believe could mean that the government's financial policy has done too much too soon, raising the risk of an interest rate hike in the future. The Swedish economy rose by 2.4 percent in the third quarter of 2025 compared with the same quarter last year, according to national stats agency Statistics Sweden. That was much more than expected analysts were predicting that GDP would rise around 1.6 percent compared to last year, Bloomberg previously reported."

"According to today's figures, recovery is much further along than what the government and the Riksbank expected when they were determining their financial policy," Spector said. She added that there is "a risk that the policy is too expansive," and that it could mean that an increase to interest rates comes sooner than predicted. "It could be on the table at some point next year," she said, while adding that it's still "a while away"."

National statistics show GDP rose 2.4 percent year-on-year in Q3 2025, well above analyst expectations near 1.6 percent. Economic recovery accelerated after the summer, with a notable increase in household consumption in August. The stronger growth suggests that both fiscal policy, including an expansive 2026 budget, and the central bank's stance were based on forecasts that understate current momentum. The stronger momentum raises the risk that policy is too expansive and increases the likelihood that the central bank may need to raise interest rates sooner than previously anticipated, potentially bringing a rate decision into consideration next year.

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