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The Swedish authorities would like to thank the mission teams for the reports as well as for the open and constructive policy discussions during the FSAP mission and Article IV consultation with Sweden. The authorities broadly agree with the conclusions and recommendations of the staff reports.
1. Sweden’s economy experienced a strong recovery after the pandemic, which continued well into 2022. GDP growth is projected at around 3 percent in 2022. It was broad-based, reflecting high, albeit declining, private consumption, investment, and exports. The labor market was tight and general shortages persisted. Labor market participation was high, and the employment rate (69.5 percent in November) and hours worked continued to increase. However, the unemployment rate remained one of the highest in the region (7.2 percent in November).
Sweden recovered rapidly from the Covid1-19 crisis, and GDP reached its prepandemic level in mid-2021. In the context of a robust supervision and regulation framework, the financial sector exited the crisis with substantial capital and liquidity buffers. Going forward, growth is expected to slow amid higher energy prices, tighter financial conditions, and reduced confidence following sharply lower house prices. Given stubborn inflation, the Riksbank has been normalizing rates more aggressively than expected last year. Systemic risks to the financial system arise from (i) high exposure of banks to the commercial real estate (CRE) sector; (ii) limited liquidity in corporate bond markets; (iii) high indebtedness of households and sensitivity to higher interest rates. The banking system is nearly three times 2021 GDP and is interconnected domestically and regionally.
This paper reports to the Executive Board on the outcomes of the Central Bank Transparency Code (CBT) pilot reviews. The pilot CBT reviews helped central banks evaluate their transparency practices and strengthen dialogue with external stakeholders. The CBT pilots provided valuable information on the resources required for the reviews going forward. Staff will continue to offer CBT reviews to the rest of the membership. The staff will report back to the Board in FY2026 on the progress of the CBT reviews and an update to the Code following five years of implementation.