Finance Minister Anders Borg’s focus on jobs was praised by the Commission in its autumn prognosis.
Other major factors behind the positive developments in Sweden were high levels of investment and sound public finances. But consumption and exports were under expected levels, meaning growth was slower than it might otherwise have been, the Commission said.
In 2007 as a whole the EU expects the Swedish economy to grow by 3.4 percent. Growth is expected to slow to 3.1 percent in 2008 and 2.4 percent in 2009.
The number of jobs available increased by two percentage points over the year, while unemployment fell by one percentage point.
Wages are expected to increase 4.5 percent this year, which will have a negative effect on Sweden’s competitiveness. They will also push up inflation, although this was at a low level from the outset, the Commission said.
Inflation is expected to land at around 2 percent in 2008 and 2009. Sweden’s central bank, the Riksbank, is expected to deal with this by raising interest rates.
Sweden’s growth rates are expected to be higher than the EU average for 2007. Growth in the entire 27-member bloc will be 2.9 percent, falling to 2.4 percent in the following two years.