Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or every six months in the cases of sovereigns, sub-sovereigns and supranational organisations that may act as a lender of last resort.

Scope performs monitoring reviews to determine whether material changes and/or changes in macro-economic or financial-market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review.

Monitoring reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit rating’s performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodology/ies, including key rating assumptions and model(s). Scope announces the result of each monitoring review on its website and/or on its subscription platform ScopeOne.

Scope completed the monitoring review for the Kingdom of Sweden (long-term local- and foreign-currency issuer and senior unsecured debt ratings: AAA/Stable; short-term local- and foreign-currency issuer ratings: S-1+/Stable) on 20 January 2026.

This monitoring note does not constitute a credit-rating action, nor does it indicate the likelihood that Scope will conduct a credit-rating action in the short term. Information about the latest credit-rating action connected with this monitoring note along with the associated ratings history can be found on scoperatings.com.

Key rating factors

For the updated rating report accompanying this review, please see here.

The Kingdom of Sweden’s (Sweden) long-term AAA/Stable ratings are underpinned by the following credit strengths: i) the country’s wealthy, diversified and competitive economy; ii) a strong fiscal framework and low public debt; and iii) a robust external position driven by consistent current account surpluses, a net international creditor position and substantial international reserves that shield the country from short-term shocks.

The main credit challenges relate to: i) financial stability risks, including high levels of household and corporate debt; and ii) persistent vulnerabilities in the housing market.

The Swedish economy started to gradually recover in 2024 from a GDP contraction the previous year, further accelerating in the second half of 2025. The upturn in recovery momentum was mainly driven by domestic demand, which strengthened on the back of declining inflation, lower interest rates and rising real wages, offsetting heightened external uncertainty, which slowed down the recovery in the first half of 2025.

More moderate inflation and a favourable interest environment, along with rising real wages and the accommodative fiscal policy, will likely continue supporting growth in the coming years. This should also facilitate improvements in the labour market, via an increase in labour demand and lower unemployment. The economic impact of higher US tariffs has been so far more contained than initially anticipated. However, global trade uncertainty and geopolitical risks remain high. Scope estimates that real GDP expanded by 1.7% in 2025, before increasing to 2.5% in 2026 and slightly moderating to 2.1% in 2027.

Fiscal policy will become more expansionary this year. In the 2026 Budget Bill the government presented measures for SEK 80bn (1.2% of GDP) aimed at supporting households, reducing structural unemployment, as well as strengthening social welfare and security. In addition, the government plans to deploy SEK 50bn in additional support to Ukraine and in national defence, bringing military spending to 2.8% of GDP this year, from 2.4% in 2025. Despite a projected headline fiscal deficit of 2.5% of GDP in 2026 and 1.9% of GDP in 2027, public debt will remain low. Scope expects a moderate rise in the public debt-to-GDP ratio to 36.5% in 2026, from 34% in 2024, before peaking at 37.8% in 2027, while remaining below the 2020 high of 40.3%.

Lower interest rates, rising real wage and fiscal support will likely contribute to the improvement of household debt affordability and a gradual strengthening of the housing market. Moreover, subdued growth in housing prices, higher amortisation payments and reduced housing construction activity also help to contain the rise in household debt compared to income. Nevertheless, as observed by the Central Bank in the latest Financial Stability Report, the proposed easing of borrower-based macroprudential measures, expected to be effective in April 2026 conditional on parliamentary approval in early 2026, could result in a renewed increase in household indebtedness and housing prices over the medium term. Property companies have also benefitted from the declining interest rates, which lowered the financing costs on the bond market. However, real estate firms remain highly indebted, with relatively short-term interest rate fixation period and debt maturities for their liabilities. This poses a risk to financial stability especially in periods of economic downturn, due to the significant exposure of Swedish banks and other financial institutions to these entities.

The Stable Outlook reflects Scope’s view that the risks Sweden faces over the next 12 to 18 months are well balanced.

Downside scenarios for the ratings and Outlooks are if, individually or collectively:

1. the fiscal outlook deteriorated significantly, resulting in a sharp increase in public debt; and/or
    
2. there is a significant worsening in the economic outlook, for example due to a sharp correction in the housing market.

The methodology applicable for the reviewed ratings and/or rating Outlooks (Sovereign Rating Methodology, 27 January 2025) is available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst: Alessandra Poli, Analyst
 
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