The Swedish economic picture has brightened significantly since the severe recession in the early 1990s. Growth has been strong in recent years, with an annual average GDP growth rate of 2.5% for the period 2000-2004, and the inflation rate is low, with an annual average inflation rate of 1.9% for the same period. Since the mid-1990s the export sector has been booming, acting as the main engine for economic growth. Swedish exports also have proven to be surprisingly robust. A marked shift in the structure of the exports, where services, the IT industry, and telecommunications have taken over from traditional industries such as steel, paper, and pulp, has made the Swedish export sector less vulnerable to international fluctuations.

During 2004 real GDP rose by 3% and is projected to expand by 2.7% in 2005.

The government budget improved dramatically from a record deficit of more than 12% of GDP in 1993 to an expected surplus of 8% of GDP in 2001. The new, strict budget process with spending ceilings set by parliament, and a constitutional change to an independent Central Bank, have greatly improved policy credibility. This can be seen in the long-term interest rate margin versus the Euro, which is negligible. From the perspective of longer term fiscal sustainability, the long-awaited reform of old-age pensions entered into force in 1999. This entails a far more robust system vis-ý-vis adverse demographic and economic trends, which should keep the ratio of total pension disbursements to the aggregate wage bill close to 20% in the decades ahead. Taken together, both fiscal consolidation and pension reform have brought public finances back on a sustainable footing. Gross public debt, which jumped from 43% of GDP in 1990 to 78% in 1994, stabilized around the middle of the 1990s and has been decreasing in recent years. In 2004 public debt was about 47.7% of GDP. These figures show excellent improvement of the Swedish economy since the crisis of the early 1990s.

In contrast with most other European countries, Sweden maintained an unemployment rate around 2% or 3% of the work force throughout the 1980s. However with high and accelerating inflation at this time, it became evident that such low rates were not sustainable, and in the severe crisis in the early 1990s the unemployment rate increased to more than 8%. Unemployment held steady in recent years at about 5%. It was 5.5% for 2004, but job creation remains a stubborn problem. As of June 2005 the unemployment rate was 7.1%.

Eighty percent of the Swedish labor force is unionized. For most unions there is a counterpart employer's organization for businesses. The unions and employer organizations are independent of both the government and political parties, although the largest federation of unions, the National Swedish Confederation of Trade Unions (LO), always has been linked to the largest political party, the Social Democrats.

There is no fixed minimum wage by legislation. Instead, wages are set by collective bargaining.