The Swedish economy will peak this year but external demand will limit the slowdown, the National Institute of Economic Research said in its latest forecast, released Wednesday.
Gross domestic product is forecast to grow 2.5 percent in 2018, unchanged from the previous projection.
Then the growth is expected to slow next year as both manufacturing and housing investment will see slower increases. GDP growth is seen at 1.9 percent, unrevised from June.
The think tank forecast 1.7 percent expansion in 2020 and 1.8 percent in 2021.
Inflation is expected to rise to 2.5 percent next year from 2 percent this year. In June, the NIER had forecast 1.8 percent inflation in 2018 and 2.2 percent in 2019. The estimate for 2020 was retained at 2.5 percent.
The agency said to prevent core inflation from rising too far, the Riksbank is expected to commence a series of policy rate hikes in February next year.
The central bank will continue to raise the repo rate very gradually, and the inflation-adjusted repo rate will remain negative right through to the latter part of 2022, NIER added.