Sweden will remain a growth outperformer among developed states,but the economy is set to cool slightly from well-above trend levels.
The surge in migrant inflows in 2015-2016 will lead to higher economicgrowth over the medium term, but will present challenges tothe fiscal accounts, the labour market and domestic political stability.
The Swedish political scene is splintering and new realignmentslook likely following the 2018 general election. The uncertainty overfuture policy formation will continue to weigh on BMI's political riskscore for the country.
Interest rates will remain low through 2018 as the central bank (Riksbank)will maintain a negative policy rate and inflation will continueto surprise to the downside.
Major Forecast Changes
We have raised our already-above consensus forecast for real GDPgrowth in 2017 to 3.1% from 2.8%, though we maintain our 2.5%projection for 2018.
We have lowered our short-term political risk score to 86.5 from 89.0,due to increased policy uncertainty a year ahead of the September2018 legislative elections.