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Sweden is a constitutional monarchy with a a Prime Minister and a monarch. Sweden is one of the wealthiest economies in Europe, with a GDP per capita in purchasing power parity around 20% above the European Union average. Sweden’s export-based economy – exports are equivalent to more than 45% of GDP. Important sectors of Sweden’s economy are public administration, defence, education, human health and social work activities, industry and wholesale and retail trade, transport, accommodation and food services. Intra-EU trade accounts for 52% of Sweden’s exports (mostly towards Germany, Denmark and Finland), 68% of its imports.

The consensus-approach to labour market relations is the main pillar of the country’s economic model. This is characterised by centralised wage negotiations, high taxes and an advanced welfare system.

Manufacturing, which accounts for around 15% of gross value added, is a key sector. The country has a competitive advantage in green technologies. Indeed, Sweden, like other Nordic countries, has long been committed to sustainable development and is now one of the OECD countries with the lowest greenhouse gas emissions per capita. Environmental objectives are increasingly integral to every policy area.

While Sweden is part of the European Union, it has not adopted the euro so the country has an independent monetary policy. Looking at risks, elevated house and rent prices, as well as household indebtedness, remain a key challenge for the economy.