Analysis and insight into trends
in money and banking, and their impact
on the world's leading economies


% annual growth rate:

  M3 Nominal GDP
1962- 2018 7.5% 7.3%
1962-1970 8.2% 8.1%
1971-1980 11.4% 11.8%
1981-1990 7.8% 9.9%
1991-2000 4.9% 4.6%
2001-2010 6.7% 4.1%
Eight years to 2018 5.8% 3.9%

Sources: M3 from Statistics Sweden, new definition from 1998, data for 1961-1997 created using growth rate of old definition of M3; GDP from Statistics Sweden..

The medium-term relationship between money and nominal GDP growth in Sweden, 1961-2018

Five-year moving averages of annual % changes, with 1961 being the start of the first five-year period

Comment on monetary trends in Sweden

(with thanks to Gabriel Stein)

As with most advanced economies, Sweden’s Riksbank has an inflation target, in this case 2%. Unlike many other economies, it has from time to time reached this target in recent years, but only to see inflation drop back towards 1% again. This is important for the current outlook. The relationship between nominal broad money growth and nominal GDP developments is as reasonable in Sweden as it is in any economy. Broad money growth undershot GDP growth significantly in the first half of the 1980s, not least as part of a strategy to bring down inflation, but also heralding the eventual crash of the early 1990s (Sweden’s worst depression since the 1920s). An unsustainable surge in credit, notably for housing purposes, preceded the Great Recession, with M3 eventually growing by less than 3% in the five years to both 2012 and 2013. Recent data is considerably more buoyant, and the lack of inflation means that nominal GDP growth is all but equivalent to real. In October 2019, M3 growth reached a two-year high of 9.6%, while credit to the non-bank private sector is steady at around 5%, equally divided between consumer and corporate borrowing. The implication is that Swedish economic activity should continue to improve in 2020.

You can access Gabriel Stein's latest comment on monetary developments in Sweden here.