The world economy is slowing down but showing unexpected resilience, mainly in the US. Global GDP increases by around 3 per cent annually during 2025-2027 - slightly above our previous forecast. The trade agreements of the summer and autumn resulted in high tariffs, although not as high as feared. Expansionary fiscal and monetary policy, combined with optimistic financial markets, lend support but also create risks. Inflation is headed towards target levels in most major economies, albeit at slightly varying paces. In Sweden, the recovery in household consumption and GDP is finally picking up, and GDP grows by almost 3 per cent in 2026 and 2027. These are some of the conclusions drawn in SEB's macroeconomic forecast Nordic Outlook Update.

In this report, we also revise our global growth forecast upwards, albeit moderately. Global GDP is expected to grow by around 3 per cent annually during 2025-2027. This is a couple of tenths above our August forecast and in line with the OECD's potential growth rate estimate. Tariff-driven export and import frontloading in the spring has affected many countries' growth profiles, with a stronger start to the year and weaker towards the end. The negative effects of the tariff shock have so far been milder than feared. One reason for this is that the tariffs have been lower than feared so far, although predictability has also improved now that a number of trade agreements are in place. The fact that other countries have chosen not to respond with countertariffs has, along with the US' one-year agreement with China, also reduced the risk of an escalating global trade war. Besides, the economy is affected by counteracting forces such as the US' extensive AI investment and Europe's increased defence and infrastructure spending. Our global growth forecast is now close to the one we presented a year ago, despite the drastic tariff policy and global unease of the past ten months.

"The reduced uncertainty is welcome. However, it would be wise to anticipate a continuing tense relationship between the US and China, which is competing for global leadership in a growing number of areas. The power and influence held by countries that can access rare earth metals and advanced computer chips has been made clear lately. White House policy is not the only source of uncertainty either. The EU and China also need to find a constructive cooperation structure and many countries are contending with major tensions in domestic policy," explains SEB's Chief Economist Jens Magnusson. 

Inflation on the right track for most 
Global disinflationary forces are considered to be sufficiently strong to bring inflation back to targets within a reasonable timeframe. Falling Chinese export prices, lower commodity and energy prices, efficiency gains - from AI, for example - and a stronger currency for many countries all add to global price pressure. In the US, actual tariff levels, measured as tariff revenue as a share of imports, are below the theoretical calculations resulting from the trade agreements. The tariffs are starting to become visible in US commodity prices, although it appears that the impact will take a little longer and be milder than expected, partly due to stockpiling before the tariffs were introduced, but also because of subdued demand, apart from among those with the highest income. Yet, it is too early to dismiss the tariff effects and risks to the global growth forecast are still considered to be slightly greater on the downside than on the upside.

"Several countries - including China, the US, Germany and the UK - are facing both structural and cyclical challenges, while asset prices and public debt are at historical highs. Trade tensions and geopolitics add to the unpredictability. An unexpected upturn in inflation, higher government bond yields, a stock market slump or signs of the expected gains from major AI investment failing to transpire could result in a toxic growth cocktail," comments Daniel Bergvall, SEB's Head of Economic Forecasting.

Sweden: Growth finally picking up 
The recovery in household consumption and GDP has finally started to pick up. Third quarter GDP was almost one per cent above our forecast in Nordic Outlook in August, according to Statistics Sweden's (not entirely reliable) flash estimate, and monthly consumption has accelerated over the past three months. We believe that actual third-quarter GDP will be slightly lower than the flash estimate, while growth indicators need to rise further to be in line with our forecast. Nevertheless, we raise our growth forecast to 1.3 per cent for this year and 2.8 per cent for next - one to two tenths above the forecast in our Nordic Outlook August edition. In 2027, GDP grows by almost 3 per cent.

Household consumption is expected to rise by almost 3 per cent in both 2026 and 2027, supported by rising real wages, pent-up consumption needs and reduced taxes. Real disposable income is expected to increase by an average of 2.5 per cent during 2025-2027. After previous disappointments for consumption, the saving ratio has risen to record highs this year. 

"Still subdued consumer confidence is an uncertainty factor. And, even if growth picks up, GDP is still well below the previous growth trend. We do not see any clear signs of a near-term labour market recovery either," comments Jens Magnusson. 

Labour market remains weak and inflation is headed down 
Unemployment continues to rise, although the upturn is showing some signs of levelling out. Labour market indicators have only marginally improved and we do not expect unemployment to start falling until the spring. The National Institute of Economic Research's indicator of labour shortages in the business sector continued to decline in the third quarter. Wage increases are expected to slow down from 3.7 per cent this year to 3.2 per cent in 2027. The next round of wage negotiations will take place in the spring of 2027 - a period when inflation is expected to be below the 2 per cent target. Indirect taxes will reduce inflation by almost one percentage point next year, mainly due to lower VAT on food. 

Moderate wage growth, subdued international prices and a stronger Swedish krona indicate that inflation will remain below the target in both 2026 and 2027, also adjusted for lower indirect taxes. The Riksbank has probably completed its cuts and we still expect a hike in 2027, but have moved it from June to December. 

"The policy rate is expected to remain at 1.75 per cent throughout 2026. We consider it unlikely that the Riksbank will alter the interest rate again in the near term, although lower inflation and a weak labour market mean that yet another concluding rate cut in the spring cannot be completely ruled out. The Riksbank's unemployment forecast is probably overly optimistic," comments Jens Magnusson. 

Increased public borrowing  
Expansionary fiscal policy, increased defence spending and support for Ukraine are expected to lead to a significant rise in government borrowing in the coming years. 

"The investments correspond to a fiscal growth impulse of close to 1.5 per cent of GDP. Half of this effect, however, comes from support for Ukraine and higher defence spending, and will therefore not fully contribute to growth in Sweden. At the same time, defence equipment is starting to become an important driver for the industrial sector," explains Daniel Bergvall.

Key data: International & Swedish economy (figures in brackets from Nordic Outlook August 2025)