Slowing inflation leaves room for spending as Swedish government injects $1.6 billion into health care, employment and the justice system

The amendments to the 2024 budget come as Ulf Kristersson’s government, which has pledged to run a cautious fiscal policy that doesn’t contribute to fueling price increases, has been encouraged by a string of inflation prints that show a clear downward trend. They include a 6 billion kronor addition to local governments that are in charge of health care in the Nordic country, as well as additional spending on defense and infrastructure, most of which have been announced in previous weeks.

“It is good news that inflation is slowing, and it enables us to shift toward a more normalized fiscal policy for this phase of the economic cycle,” Finance Minister Elisabeth Svantesson said Monday in a video statement on the government website. “We will provide support to the areas that are most in need and where the consequences of inflation have been the greatest.”

Inflation data published last week showed that price increases are now approaching the central bank’s 2% target, which could enable it to cut interest rates in May or June, providing relief to an economy that contracted for three consecutive quarters in 2023. The government expects 0.7% growth this year, while unemployment is expected to increase to 8.3% from 7.7% in 2023.