Sweden's National Institute of Economic Research (NIER) has revised its prediction for GDP growth in 2017 to a more optimistic one of three percent, up from the previous forecast of 2.5 percent.
As growth was surprisingly strong in the second quarter it is thought that the upswing will be greater this year than initially expected, the NIER explained. Stronger than expected investment in businesses and housing is a driving factor
“Domestic demand is driving it and robust growth in the rest of the world is providing support. In addition the upswing is reflected in strong public finances,” the NIER said in a statement.
“The upturn is reflected in the labour market and employment continued to grow quickly in the second quarter. But a significant lack of labour with the demanded competencies will hamper economic development going forward,” it warned.
That skills shortage does not mean that wages will increase significantly however according to the NIER, with average wage increases predicted to be below three percent next year.
And in contrast for the growth prediction for 2017, the GDP growth prediction for 2018 has been revised down by 0.2 percent to 2.2 percent.
Fresh figures released by Statistics Sweden last week show that Sweden's GDP grew by 1.7 percent in the second quarter of 2017, meaning its year-on-year growth rate landed at four percent – comfortably beating growth of 2.8 percent that was expected from that period by forecasters.
Analysts at Nordea called it “crazy strong” growth that was “far above its potential and mainly driven by domestic sectors”.