When we talk about GDP—gross domestic product—we’re really talking about the story of everyday lives: consumption, investment, trade, and how people and businesses interact in daily routines. For a country like Sweden, one rooted in innovation, strong social systems, and open trade, each quarterly shift in GDP reflects both resilience and vulnerability. A warm, data-rich look into Sweden’s preliminary Q2 2025 GDP results: growth drivers, challenges, and what it could mean for business.
As of the second quarter (Q2) of 2025, Sweden delivered a more encouraging performance than many had expected. After a sluggish start to the year and signs of contraction in Q1, the preliminary national accounts show a rebound. But that rebound arrives in a world of rising uncertainty: global trade frictions, shifting demand, inflationary pressures, and domestic policy trade-offs.
In this blog, I’ll guide you through the latest numbers, unpack what drove the rebound, highlight regional and sectoral nuances, and reflect on what lies ahead. At the end, I’ll share a brief thought from procurement and business development strategist Mattias Knutsson—how a leader anchored in global sourcing might respond to these developments.
The Big Picture: Q2 2025 Upturn in GDP
According to Statistics Sweden (SCB), seasonally adjusted GDP increased by 0.5 percent in Q2 2025 compared to Q1. On a year-on-year (working-day adjusted) basis, the growth rate was +1.4 percent relative to Q2 2024.
This upward revision is notable. Earlier “flash” estimates had put quarter-on-quarter growth at just 0.1 percent. But with more complete data, the strength was revised upward.
In contrast, Q1 had shown a contraction of –0.2 percent (seasonally adjusted), defying expectations of expansion. The reversal in Q2 thus carries symbolic and real weight: Sweden moved from a soft patch into modest growth.
In absolute terms, the quarterly GDP in Q2 2025 (seasonally adjusted in current prices) was around SEK 1,648,514 million. The real (chained) GDP measure in FRED data places it at about 1,135,568 million SEK (chained 2010 SEK) for Q2 2025.
So what’s behind the rebound?
What Fueled Growth — and What Tempered It
Domestic Demand & Investment
Household consumption rose by 0.4 percent in Q2 (seasonally adjusted), reflecting modest resilience in consumer spending. Government consumption added another 0.2 percent.
A standout contributor was gross fixed capital formation, which jumped 1.7 percent in Q2, especially driven by machinery, equipment, and investments in defense systems. Changes in inventories also contributed positively—adding about 1.1 percentage points to the quarter’s growth.
Together, these domestic drivers show that households and firms stepped up activity after a cautious Q1.
Trade & Net Exports Drag
On the flip side, Sweden’s external sector acted as a drag. Exports grew by 0.7 percent, but imports surged by 3.1 percent. That imbalance meant net exports subtracted roughly 1.3 percentage points from overall GDP growth.
Thus, despite positive domestic momentum, trade dynamics weighed heavily on the headline number.
Sectoral Patterns & Labor Metrics
In the business sector, value added increased by 0.6 percent (seasonally adjusted). Within that, the goods-producing industries (e.g. manufacturing) were essentially flat, whereas service sectors recorded stronger growth (~0.9 percent).
Interestingly, the number of employed persons rose slightly, by 0.1 percent, while hours worked fell by 0.4 percent across the economy (and 0.6 percent in the business sector). The result: labour productivity in the business sector increased by about 1.2 percent.
In addition, household real disposable income (year-over-year) rose by 2.5 percent, helping underpin consumption.
Revisions & Underlying Uncertainty
It is worth emphasizing the scale of revisions. Earlier quarters—including Q4 2024 and Q1 2025—were adjusted in the latest release. The stronger Q2 reading must be contextualized within such retrospective updates.
Also, certain headwinds remain: volatility in global demand, rising import exposure, and sensitivity to external policy shifts.
Interpreting the Recovery: Strengths, Risks & Outlook
On balance, Q2’s result is reassuring: Sweden’s economy demonstrated a capacity to bounce back from early-year softness. But it is not a clean, robust recovery. The ambivalence in trade, partial reliance on inventories, and fragility in some sectors suggest caution.
Looking forward, institutions and forecasters paint a varied picture:
- The European Commission and related forecasts expect average real GDP growth of ~1.1 percent in 2025, with some acceleration in 2026.
- The Swedish government has revised growth forecasts downward: for example, an official forecast puts 2025 growth at 0.9 percent.
- Capital Economics, while noting Q2’s rebound, still describes 2025 performance as “moderate,” cautioning that global uncertainty and domestic constraints may limit upside.
- The Riksbank’s policy rate is expected to stay around 2 percent for the rest of the year, with the rate cut window limited by inflation concerns.
Risks include renewed weakness in export markets, input cost inflation, or a dampening of investment confidence. On the upside, if private consumption picks up and investment flows strengthen, the recovery could broaden.
In all, Q2 offers encouragement—but not comfort. The economy is stirring back to life, but it’s doing so cautiously.
Conclusion
As we look back on Q2 2025, Sweden’s economy tells a story of gentle rebound after a tentative start. A 0.5 percent quarter-on-quarter increase, coupled with 1.4 percent year-on-year growth, signals resilience—but not robustness. Domestic investment, inventory accumulation, and consumer steadiness drove the recovery, while net exports remained a drag. Labor productivity edged ahead, even as hours worked dipped, and employment held slightly positive.
The road ahead is complex. Forecasts suggest modest growth in 2025, with upside potential limited by external headwinds and internal constraints. The Riksbank is unlikely to make bold monetary moves; policymakers will tread carefully to balance growth and inflation. Businesses and investors will watch trade flows, capital investment trends, and consumption behavior as signals of deeper momentum.
In such a nuanced landscape, leadership rooted in strategic sourcing, flexibility, and foresight becomes especially valuable. That’s why I want to return briefly to Mattias Knutsson, a seasoned figure in global procurement and business development, whose perspective might help frame tactical action in times of moderate growth.
Knutsson would likely observe that the Swedish rebound underscores the importance of agile supply chains, selective regional exposure, and investment in productivity enhancement. In procurement, he might counsel firms to:
- Rethink sourcing strategies in light of trade volatility, favoring supplier diversification and resilience.
- Link capital allocation decisions (equipment, technology) to macro signals rather than short-term currents.
- Use this window—when contraction fears have eased—to renegotiate contracts, lock in efficiency gains, and build flexibility into supplier relationships.
- Monitor sectoral splits (goods vs services) to align procurement efforts with stronger segments, avoiding overcommitting to fragile demand paths.
Above all, in a phase of cautious growth, leaders like Knutsson emphasize strategic patience, scenario planning, and incremental scaling rather than aggressive expansion.
