Sweden's finance minister sees signs of economy picking up

STOCKHOLM (Reuters) -Sweden's economy is picking up speed after a period of sluggish growth, but uncertainty remains high, Finance Minister Elisabeth Svantesson said on Wednesday.

Svantesson said that consumers were beginning to start spending after a series of rate cuts by the central bank, while both industry and the household sector are more positive.

"It's not that it's very bright, but there is a light there at the end of the tunnel," she told a press conference.

The Swedish economy has struggled this year and households remain cautious about spending, despite real wage growth and eight rate cuts since spring 2024.

Other than house-builders, who are still struggling, "sentiment in Swedish business is more positive and better than normal," said Svantesson.

In the third quarter, GDP growth was however faster than expected at 1.1% from the previous quarter, according to an October 29 flash reading.

The right-wing government's budget for 2026 is the country's most expansive since the pandemic, aiming to boost households and speed up growth ahead of a general election in September.

The government expects GDP to increase 3.1% next year.

Svantesson said she was not worried that stronger growth would lead to a pick up in inflation, which is currently above the central bank's 2% target.

"It (inflation) has come in a bit higher for a number of understandable reasons, but it isn't high and I don't expect our budget, for example, to push up inflation," she said.

Flash inflation figures for October showed headline consumer prices rose 3.1% from the same month a year ago. Stripped of volatile energy prices, inflation was 2.8%.

The central bank kept its key rate on hold earlier this month at 1.75% and said the easing cycle, which started in spring last year, was now over.

Analysts expect the next move to be a hike, probably in spring 2027.

(Reporting by Anna Ringstrom and Simon Johnson, editing by Terje Solsvik and Alexander Smith)