The Swedish economy grew faster than expected in the second quarter of 2026, showing signs of a stronger-than-anticipated recovery. According to data from Statistics Sweden (SCB), the country’s GDP increased by 1.6% compared with the previous quarter and by 3.3% year-on-year. Analysts had expected annual growth of around 2.5%.
Economic growth was broad-based, with the strongest contributions coming from fixed capital investment, exports, and household consumption. The combination of stronger domestic demand and increased investment suggests that economic activity is gaining momentum. At the same time, sentiment among both consumers and businesses is improving.
According to Sweden’s National Institute of Economic Research (KI), the economic tendency indicator rose from 104.6 to 105.1 points in August. Consumer confidence also improved, increasing from 97.2 to 98 points. KI noted that Swedish households’ confidence has returned to normal levels for the first time since November 2024.
This improvement could encourage consumers to spend more, providing additional support for economic growth. Against the backdrop of improving economic conditions, a larger-than-usual number of companies also expect to raise their prices over the next three months. This could indicate stronger demand, but it may also create additional pressure on inflation if price increases become widespread.
The retail sector, however, presents a mixed picture. In July, retail sales volumes fell by 0.2% compared with June. On an annual basis, however, retail sales were 6.2% higher than a year earlier.
Sales of non-food products increased by 8.6%, while food sales rose by 5.3%, excluding the state-owned alcohol retailer Systembolaget. Overall, the latest figures suggest that Sweden’s economy is entering the second half of 2026 with stronger momentum than many analysts had anticipated. If household confidence continues to improve and investment remains strong, these factors could support further economic growth in the coming quarters.
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