In 2017, activity is expected to slightly slow, due to less dynamic demand than in 2016. Private consumption will be affected by slower wage growth and the decline in unemployment (6.4% in November 2016). However, this will remain high due to the continuation of the Riskbank's (Central Bank) accommodative monetary policy as well as a significant immigration. The country has welcomed a large number of migrants (about 300,000) since 2015, although migration policy will be more restrictive in 2017. However, integrating these migrants in the labour market is likely to take some time, which will limit the decline in unemployment, especially among non-European and low-skilled workers. Moreover, the rise in property prices should be more moderate than before, because of the Government's desire to reduce household debt levels (175% of gross disposable income) by introducing new rules to limit mortgage loans. Overall investment is expected to continue to grow in 2017, although more moderately than in 2016 (6.6%). Residential investment will be slightly less dynamic (while remaining firm), due to a shortage of labour, which will hamper the construction sector, while the automotive and pharmaceutical sectors will fare better. Meanwhile, the contribution of foreign trade to growth is projected to remain neutral in 2017. Despite a further depreciation of the krona in 2016, which pushed up the price of imported goods, the Central Bank is worried about the weakness of inflation. As a result, the Riskbank may ease its monetary policy still further (deposit interest rate in November of -0.5%), in order to bring inflation gradually back close to its target (2%).

Fiscal policy will remain relatively neutral due to the favourable economic climate, which is expected to keep the budget in balance in 2017 and slightly reduce the public debt. Nevertheless, the 2017 budget contains a number of measures aimed at supporting domestic demand. The drop in the number of migrants entering the country in 2017 will help to target spending better on facilitating their integration, without, however, impacting on the public finances. This budget also provides for higher spending on education, improving access to the internet in rural areas as well promoting research and innovation. This moderate increase in government spending (of the order of USD 3 billion) will be offset by higher tax receipts, particularly from corporation tax and higher taxes on alcohol and fuel. In addition, the Government's aim of dispensing totally with fossil fuels by 2030 is being delivered through incentives to recycle and invest in renewable energy. It is worth noting that the share of the latter in the supply of energy is among the highest in the OECD. The current account surplus is also set to remain stable in 2017, at a very comfortable level. Imports will still be firm, buoyed by growing domestic demand, but will, nonetheless, be offset by stronger exports, due to the moderate growth in demand from the country's main trading partners. However, a slowdown in demand from the United Kingdom (3rdlargest trading partner), after Brexit, could affect the trade balance through a decline in exports. The Swedish banking sector is well capitalised but highly concentrated: the country's four major banks hold about 75% of assets, which represents 255% of GDP. The banking system will therefore present a high risk as household debt is high and property prices are still rising (danger of the bubble bursting).

Despite a favourable economic climate, the centre-left coalition is increasingly discredited. The Sweden Anti-Immigration Party has climbed in the polls by criticizing the current government's immigration policy. They also want a referendum, similar to that of the United Kingdom, on getting Sweden out of the European Union. However, this party remains fairly isolated in the political landscape and a poll in October 2016 suggests that Swedes are opposed to a withdrawal from the EU. The coalition government could, therefore, stay in place until the next parliamentary elections due to be held in September 2018. The business climate ill remain very favourable in this country, which is ranked 9th in the latest World Bank Ease of Doing Business Index.