It is forecasting gross domestic product growth this year of 3.6 per cent after an expected 4.3 per cent in 2006.
The rate will slow to 2.9 per cent in 2008, it says. The Organisation for Economic Co-operation and Development says Prime Minister Fredrik Reinfeldt and his four-party centre-right coalition should not be tempted by strong finances to pass unfunded tax cuts.
Despite economic growth, inflation has stayed low and the report says the independent central bank, the Riksbank, has a ”highly credible” monetary policy. It raised interest rates six times last year and is expected to announce another rise on Thursday to 3.25 percent.
The OECD is also hailing plans to sell state holdings in companies like telecommunications firm TeliaSonera, and the bank, Nordea. It notes, though, that job growth has lagged the economic expansion and additional steps might be needed like less strict employment legislation, calls trade unions here have resisted.
Meanwhile there are more and more jobs available in Sweden but the number of young people unemployed is still one of the highest in the European Union according to the latest figures. The Swedish Employment Service’s monthly report shows 75 thousand new jobs have been created recently. But people aged 18 to 24 are particularly struggling to find work and the number of long-term unemployed last month was almost twice as high as in January 2006.