Economic Recovery Faces Middle East Headwinds.

Finance Minister Elisabeth Svantesson released a revised economic forecast this month, slightly lowering the 2026 growth projection to 2.8% (down from 3.0%). While Sweden’s domestic recovery remains on firm footing with rising real wages, the ongoing conflict in the Middle East has created global uncertainty, specifically regarding fuel and fertilizer costs. To protect households, the government is implementing a temporary VAT reduction on food, cutting it from 12% to 6% starting in April, a move designed to curb inflation while retail trade sentiment remains soft.

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