The Swedish economy is facing a deeper contraction than during the domestic banking crisis of the early 1990s. Output is projected to fall sharply in 2009 before recovering gradually in 2010, with the unemployment rate exceeding 11%.

The Swedish economy stalled in the first half of 2008 and is expected to weaken in the near term, as the effects of the international financial crisis take their toll. Consumption is projected to pick up late next year as the turmoil subsides and thanks to further income tax cuts and lower interest rates. Export growth should gradually recover as Sweden’s export markets expand again. Residential investment is expected to contract, with weaker house prices and confidence compounding unfavourable demographic patterns. Employment and labour force participation are both expected to decline, and labour productivity growth is expected to remain weak in the coming quarters.

The number of broadband subscribers in the OECD rose to 235 million by December 2007, up 18% from 200 million subscribers in December 2006.This growth increased broadband penetration rates to 20 subscriptions per 100 inhabitants, up from 16.9 in December 2006.

After posting very strong growth in 2006, the Swedish economy cooled during 2007, due mainly to weaker export growth. Domestic demand is expected to continue to grow markedly in the near term as strong employment growth and income gains should boost private consumption.

Her Royal Highness Crown Princess Victoria of Sweden visited the OECD headquarters in Paris on 4 December 2006. The Crown Princess met OECD Secretary-General Angel Gurría (photo), other senior officials of the OECD secretariat and Swedish personnel in the OECD. Crown Princess Victoria was participating in a diplomat training programme at the Swedish Ministry of Foreign Affairs. Discussions at the OECD covered the economy, agriculture, trade and early childhood education and care.

©OECD Observer, No. 258/259, December 2006