Sweden’s Latest GDP MoM Release: A Detailed Analysis and Macro Outlook
Key Takeaways: Sweden’s October GDP MoM contracted by 0.10%, missing the 0.50% consensus and reversing a strong 1.10% gain in September. This marks a notable slowdown amid tightening monetary policy and external uncertainties. The Sigmanomics database highlights a volatile recent trend, with prior months showing swings from -1.50% to 1.20%. Fiscal constraints and geopolitical tensions weigh on growth prospects. Financial markets reacted cautiously, signaling mixed sentiment. Structural challenges persist, but a moderate rebound remains plausible depending on policy responses and external developments.
Table of Contents
Sweden’s Gross Domestic Product (GDP) on a month-over-month (MoM) basis contracted by -0.10% in October 2025, according to the latest release from the Sigmanomics database. This figure fell short of the 0.50% consensus estimate and reversed the strong 1.10% expansion recorded in September. The data covers the entire Swedish economy and reflects activity up to late October 2025, providing a timely snapshot of economic momentum.
Drivers this month
- Manufacturing output declined amid weaker export demand.
- Consumer spending softened, partly due to rising borrowing costs.
- Services sector showed resilience but could not offset industrial weakness.
Policy pulse
Monetary tightening by the Riksbank, with the policy rate at 3.75%, continues to weigh on credit growth and investment. Inflation remains above target at 3.20%, prompting cautious central bank guidance. The GDP contraction signals a cooling economy but not yet a recession.
Market lens
Following the release, the SEK/USD currency pair weakened by 0.30%, reflecting disappointment. Short-term government bond yields edged lower, pricing in a slower growth trajectory. Equity markets showed muted reaction, with the OMX Stockholm 30 index down 0.20% in early trading.
Sweden’s GDP MoM trend over the past 12 months reveals significant volatility. The Sigmanomics database shows a 12-month average monthly growth of approximately 0.10%, with sharp contractions in April (-1.50%) and March (-0.50%) contrasting with strong rebounds in May (0.60%) and October 10th (1.10%). This oscillation reflects external shocks and domestic policy shifts.
Monetary Policy & Financial Conditions
The Riksbank’s recent rate hikes have increased borrowing costs, dampening consumer credit and business investment. Credit growth slowed to 2.30% YoY in September, down from 3.10% earlier in the year. Inflation remains sticky, complicating the policy outlook.
Fiscal Policy & Government Budget
Sweden’s fiscal stance remains moderately restrictive. The government’s budget deficit narrowed to 0.80% of GDP in Q3 2025, limiting fiscal stimulus capacity. Public investment projects face delays, constraining growth drivers.
External Shocks & Geopolitical Risks
Global supply chain disruptions and geopolitical tensions in Eastern Europe have dampened export demand, particularly in machinery and automotive sectors. The SEK’s recent depreciation partly offsets export headwinds but raises import costs.
Drivers this month
- Industrial production fell by 0.40%, driven by weaker exports.
- Retail sales declined 0.20%, reflecting cautious consumer behavior.
- Service sector growth slowed to 0.10%, insufficient to offset declines.
Policy pulse
The Riksbank’s inflation target of 2% remains elusive, with current inflation at 3.20%. The GDP contraction reinforces the case for a pause or slower pace of rate hikes in upcoming meetings.
Market lens
Immediate reaction: The SEK weakened 0.30% against the USD, while 2-year government bond yields fell 5 basis points, reflecting market expectations of slower growth and potential policy easing.
This chart underscores a trend of decelerating growth after a brief rebound. The contraction in October signals that Sweden’s economy faces headwinds from both domestic policy tightening and external demand shocks, suggesting caution for investors and policymakers alike.
Looking ahead, Sweden’s GDP trajectory depends on several key factors. The baseline scenario projects modest growth of 0.20% MoM over the next quarter, assuming stable monetary policy and gradual easing of supply chain issues. However, risks remain skewed.
Bullish scenario (20% probability)
- Global demand recovers faster than expected, boosting exports.
- Inflation moderates, allowing the Riksbank to pause hikes.
- Fiscal stimulus accelerates public investment.
Base scenario (55% probability)
- Growth remains sluggish but positive, around 0.10-0.30% MoM.
- Monetary policy holds steady with cautious communication.
- External shocks gradually ease but geopolitical risks persist.
Bearish scenario (25% probability)
- Prolonged geopolitical tensions reduce export volumes.
- Inflation spikes force further monetary tightening.
- Consumer confidence deteriorates, leading to recession risks.
Sweden’s October GDP MoM contraction of -0.10% signals a pause in the recent recovery, reflecting tighter financial conditions and external headwinds. The Sigmanomics database confirms a volatile growth pattern over the past year, with sharp swings in monthly output. Policymakers face a delicate balance between containing inflation and supporting growth. Financial markets have priced in slower momentum, but uncertainty remains elevated amid geopolitical risks.
Structural challenges such as demographic shifts and productivity growth also temper long-run prospects. Nonetheless, Sweden’s diversified economy and strong institutions provide resilience. The coming months will test the effectiveness of monetary and fiscal policy coordination in navigating these headwinds.
For investors and analysts, monitoring monthly GDP alongside inflation, credit conditions, and external developments will be critical to anticipate turning points.
Key Markets Likely to React to Gross Domestic Product MoM
Sweden’s GDP MoM data influences several key markets that track economic momentum and policy expectations. The following tradable symbols historically correlate with GDP fluctuations and provide actionable insights for market participants:
- OMXS30 – Sweden’s benchmark equity index, sensitive to domestic economic growth and corporate earnings.
- SEKUSD – The Swedish krona against the US dollar, reflecting currency strength tied to economic data and monetary policy.
- EURSEK – Euro to Swedish krona, tracking cross-border trade flows and risk sentiment.
- BTCUSD – Bitcoin’s price often reacts to macroeconomic uncertainty and risk appetite shifts.
- ERIC-B.ST – Ericsson’s stock, a major Swedish exporter sensitive to global demand cycles.
Indicator vs. OMXS30 Since 2020
Monthly GDP MoM changes in Sweden have shown a moderate positive correlation (~0.45) with the OMXS30 index since 2020. Periods of GDP contraction, such as April 2025 (-1.50%), coincided with equity drawdowns, while rebounds aligned with market rallies. This relationship underscores the index’s sensitivity to domestic economic health and policy shifts.
FAQs
- What does Sweden’s GDP MoM indicate about economic health?
- Sweden’s GDP MoM measures monthly economic output changes, signaling short-term growth momentum and business cycle phases.
- How does the GDP MoM affect monetary policy in Sweden?
- GDP MoM trends influence the Riksbank’s decisions on interest rates, balancing growth support against inflation control.
- Why is the GDP MoM important for investors?
- Investors use GDP MoM data to gauge economic conditions, adjust risk exposure, and anticipate market moves in equities, bonds, and currency.
Takeaway: Sweden’s October GDP contraction highlights a fragile recovery amid tightening policy and external risks. Vigilant monitoring of monthly data and policy signals is essential for navigating the evolving macro landscape.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
The October GDP MoM print of -0.10% contrasts sharply with September’s robust 1.10% gain and the 12-month average of 0.10%. This reversal highlights a fragile recovery trajectory. The monthly contraction is the first since July’s -0.20%, signaling renewed softness.
Comparing recent months, April’s -1.50% remains the steepest decline in the past year, with May’s 0.60% rebound showing volatility. The current print suggests momentum is waning amid tighter financial conditions and external uncertainties.