in 2026, reflecting import price pass-through, weak resource utilisation, and modest wage increases. The labour market is expected to follow the weak economic conditions and improve slowly in 2026. Public finances are projected to improve somewhat. The general government deficit, at 1.5% of GDP in 2024, is expected to remain stable in 2025 before decreasing to just under 1% of GDP in 2026. The gross debt-to-GDP ratio is set to remain stable at just below 34%.  Uncertainty to delay recovery  At the end of 2024, the Swedish economy started to show signs of a cyclical upturn, supported by lower interest rates and fading price pressures. However, real GDP stagnated in the first quarter of 2025 and the recovery is expected to be delayed by global trade disruptions. In addition to the direct negative effects of external economic developments, heightened uncertainty is set to weigh on business and consumer confidence. This in turn is set to hold back private consumption and investment, particularly in cyclically sensitive equipment, even though housing construction is expected to bottom out. Economic growth is set to gradually pick up in 2026, primarily supported by stronger private consumption growth as households are expected to reduce their savings rate in view of receding uncertainty, disinflation and improved conditions in the labour market. Overall, real GDP growth is forecast to average 1.1% in 2025 and 1.6% in 2026. The balance of risks is nevertheless tilted to the downside.  Labour market to remain weak. In response to modest economic growth, the labour market is expected to remain weak in 2025, with the unemployment rate rising to 8.7% before falling backs somewhat in 2026 on the back of a modest pick-up in employment following the expected recovery with a lag. This notwithstanding, structural unemployment is set to remain relatively high, negatively affected by education and skill gaps. Social partners agreed nominal wage rises of around 3.5% in both 2025 and 2026 which is expected to help secure real wage gains with limited inflationary pressures and low increases in unit labour costs over the forecast horizon.  Inflation to recede in 2026  Consumer price inflation is set to remain somewhat above 2% throughout 2025, reflecting persistent rises in food prices partly offset by trade-induced decreases in prices of non-industrial goods and lower energy prices. Inflation is set to fall below 2% in 2025, reflecting a number of factors. These include the fading price impact of trade-induced supply effects, the delayed impact of the effective appreciation of the krona, moderate increases in unit labour costs, and the absence of demand pressures on prices.   Public finances remain in moderate deficit  The general government balance in 2024 was -1.5%, due to weak overall growth and a capital injection into the central bank, worth over one third of a percentage point of GDP. In 2025, with continued substantial spending on infrastructure and defence and slowing tax revenue growth, the balance is set to remain stable at -1.5% of GDP. As growth is expected to pick up in 2026, and with it government revenue, the nominal general government balance is set to improve to -0.8% of GDP.  While increasing somewhat from 2024, the general government gross debt ratio is projected to remain stable over the forecast horizon between 33 and 34% of GDP.