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Growth will remain strong as global demand and a weaker krona continue to boost exports. Exporting sectors will invest further to meet rising demand, but housing investment will contract against the backdrop of house price declines. The labour force will expand more slowly and unemployment will level off, as difficult-to-hire low-skilled workers make up a rising share of jobseekers. Households will remain cautious, with the saving rate staying high.
Both fiscal and monetary policies are expansionary during a strong upturn, and risk amplifying the business cycle. Expansionary monetary policy has succeeded in bringing inflation close to 2% and expectations are well-anchored. The Riksbank is projected to begin withdrawing monetary stimulus towards the end of 2018, which is needed to balance inflation risks against those of resource misallocation and financial imbalances, notably connected to property prices. Reforms aimed at improving the functioning of the housing market are also needed.
Economic Survey of Sweden (survey page)