Riksbank's Business Survey: "A New Black Swan" Risking Delaying Recovery

RIKSBANK'S BUSINESS SURVEY "A New Black Swan" Risking Delaying Recovery May 2026

Riksbank's Business Survey May 2026 2 Riksbank's Business Survey in May 20261 According to companies, the economic situation remains weak. Before the war in the Middle East broke out, they perceived the economy as cautiously improving. The war does not appear to have significantly affected this view. However, uncertainty has increased again, which companies believe risks delaying the already drawn-out recovery. The effects of the war in the Middle East are assessed so far as less serious than the crises of recent years. The war and the closure of the Strait of Hormuz have so far gradually increased costs for companies, mainly through higher oil prices. The situation is perceived so far as manageable. This is partly because companies have become more resilient to various types of disruptions after learning from the crises of recent years. But the longer the war continues, the greater the expected effect will be for both companies and the economy as a whole. Even if the war is resolved in the near future, some costs are expected to remain elevated for a period. Companies intend to raise their sales prices over the coming year. However, they emphasize that it is very uncertain to what extent the higher costs will actually be reflected in prices. So far, they are talking about smaller price increases, but this depends on how costs and demand develop. For trade and the visitor industry, the economic situation continues to improve gradually. Households are slowly opening their wallets more and more, but remain price-conscious. The grocery trade notes increased sales volumes after the temporary reduction in VAT on food, but other sectors are also experiencing improved sales development. Among companies selling to other businesses, views on the economic situation diverge. Companies with operations or customers in data centers, defense, aviation, and mining continue to face strong demand. The timber and pulp industries are still struggling, partly because residential construction has not yet started. There is some brightening in the automotive industry, which is experiencing slightly better demand from Europe.

1 The Riksbank conducted interviews with 41 industrial, construction, trade, and service companies as well as employer organizations with a total of approximately 230,000 employees. The interviews were conducted mainly during the period May 7-19. The Riksbank's Business Survey is published on the Riksbank's website. All quotes in this report are from respondents in the survey.

Riksbank's Business Survey May 2026 3 "It is an uncertain situation that has become even more uncertain" Companies have for some time described the economic recovery as drawn-out and fragile. Demand has not picked up as companies expected, and they perceive the economic situation as weak, although they saw some improvement in February. The war does not appear to have significantly affected the view of the economic situation now. However, it risks being a new setback for the recovery. Uncertainty has increased and clouds companies' view of economic development, see Diagram 1 and 4. Diagram 1. Economic Situation and Economic Risks Net total (left scale) and index (right scale) Note. The indices show a standardized value (mean = 100 and standard deviation = 10) of the net totals for companies stating that the current economic situation is good or bad and those stating that the economic situation in six months will be better or worse. The red line, economic situation in six months, is shifted forward two quarters. The bars show the net totals for companies stating that the risks for economic development are currently greater or less than normal. War in the Middle East: "The situation is manageable" A majority of companies assess that they are affected by the war in the Middle East, see Diagram 2. Most experience limited and indirect effects at present, and so far they are manageable. This is partly because they have experience handling disruptions and cost increases from the crises of recent years (see "We have learned a bit from the pandemic", p. 5), and partly because some have room to absorb some of the cost increases for a time. So far, companies have not been affected by extensive supply disruptions and do not report shortages of inputs that could stop production. "We are handling it, but with increased costs today, and that increase cannot be sustained long-term."

Riksbank's Business Survey May 2026 4 Diagram 2. Does the war in the Middle East affect your operations or plans? Percent "We have not seen the entire risk scenario related to this conflict yet" Companies assess that the effects of the war in the Middle East are currently less serious than the crises of recent years. They emphasize, for example, that the pandemic had a much larger immediate impact. "It created chaos in a completely different way." But the longer the conflict continues, the greater the expected effect will be for both companies and the economy as a whole. There is a lag in some cost increases, meaning that even if the conflict is resolved soon, some costs are expected to remain elevated for a period. Several are worried it will get worse in the autumn if the war continues through the summer – "then we start to get shaky." Especially worried are the travel and aviation sectors, which are affected more directly and believe that "it will be a catastrophic consequence if this continues into July." There is also concern about "the indirect problems with inflation and the economy that risk making customers more cautious." A business leader notes that "we are struggling a bit now to understand how customers will view this."

Riksbank's Business Survey May 2026 5 "We have learned a bit from the pandemic" After the crises of recent years, companies have taken measures to increase resilience against various types of disruptions. In previous surveys, they reported working towards more secure supply chains. Since the pandemic, several companies argue that "cheapest on a global market is not always the best, but one must take into account factors like the world situation." Regionalization has increased, and several companies are willing to "perhaps pay a krona more to feel a bit safer." Many companies have also changed their purchasing strategy and "spread it among more suppliers" or otherwise secured access to important components or raw materials. Some have built up larger inventories for strategic reasons. A representative in trade states that "we have learned from external turmoil that it is better to have goods than not to have them." Companies selling to other businesses also use various types of contract clauses to a greater extent to more easily pass on unexpected cost increases to their customers. Some industries have used clauses for material costs for a long time, but since the pandemic, it has also become more common with clauses for transport and energy costs. Some companies also use index clauses that allow parts of contracts to be variable: "What we learned from the pandemic and after Russia invaded Ukraine – it was that we need to have much more index in our contracts with our customers." There are examples of "clauses that can be activated and trigger renegotiation within a current contract period." There are also clauses that allow companies to charge a temporary surcharge for unexpected costs. Some companies have used such clauses to compensate for higher customs duties. Some companies emphasize that the ability to raise prices through clauses depends on demand. If there is "continued fairly weak pressure, then prices do not go up automatically." These measures are now cited as a reason why the war in the Middle East is more manageable for them than previous crises. Many also point out that the situation is different because there is a greater habit of handling crises now. Several state that the work to increase resilience will continue because "we probably have to say goodbye to that calm, stable growth that we experienced before covid." "It's now wine, now water" Among companies selling to other businesses, views on the economic situation remain split. Those with operations or customers mainly in defense and data centers, but also in aviation and mining, continue to do very well. Some experience even stronger demand than in February. "We are approaching the peak level we were at in Sweden just before the pandemic," says a respondent. In some parts of the country, where "the defense industry is growing by leaps and bounds," it is difficult to find labor. The timber and pulp industries are still struggling and in some cases "perhaps slightly worse." A business leader states that "it is a historically low level." The weak demand is partly due to too few houses being built.

Riksbank's Business Survey May 2026 6 "Renovation and such are going well, but new construction has not picked up yet," says a business leader. There is cautious optimism in the automotive industry, which is experiencing slightly improved demand from Europe. There is also a middle layer of industrial companies that argue "we are managing, but it is not good." Staffing and consulting firms confirm the split picture: "We have defense-related customers with almost unlimited demand. But we also have sectors with almost disproportionately low demand and everything in between. It is a very split picture." "Now new tariffs have come into effect" Export companies report that tariffs are changing continuously, which needs to be taken into account. The tariffs invalidated by a US court2 were replaced by a general tariff rate that is lower, thereby reducing some companies' costs for customs duties. This has also reduced the need to move production to countries with lower tariff rates. Others mention changes in import tariffs on steel, which instead lead to higher customs duties and higher costs for companies. Tariffs continue to drive costs for those importing goods to the USA via subsidiaries. For those who cannot raise prices in the US market, customs duties continue to negatively affect margins. Others state that they have increased their production in the USA to thereby reduce customs costs: "If we did not have manufacturing in the USA, it would have been incredibly difficult." Several companies state, however, that they have requested or will request refunds for the tariffs that were invalidated. But it is still uncertain whether they will get their money back and whether their customers will in turn demand refunds. "People have opened their wallets more during the last months" Over the past year, the trade and visitor industry's view of the economic situation has gradually improved as households consume more. This development has continued, but at a slow pace. The grocery trade notes increased sales volumes after the temporary reduction in VAT on food, but other sectors are also experiencing improved sales development. Several emphasize, however, that households remain price-conscious and choose low-price options to a greater extent: "Now you start to have a bit more left in your wallet. But you don't want to go back to the more expensive option. You still want to get more out of your money." Consumption has increased but without real momentum: "It is not at all like it was in 2022, the year of the cow slaughter, when everyone just started spending a lot. It feels a bit more restrained."

2 In February 2026, the so-called "reciprocal tariffs" were invalidated by a US court. At the same time, a new global surcharge tariff (so-called 122 tariff) of 10 percent was introduced on almost all goods. It applies for 150 days, i.e., until July 24, 2026.

Riksbank's Business Survey May 2026 7 "I am surprised by how resilient the consumer has been in this" The aviation and travel industry saw immediate effects on demand for international travel when the war in the Middle East broke out. Apart from that, few have noticed that the war has had any major impact on consumption willingness. But there is widespread concern that household consumption will decrease in the future if inflation and interest rates rise. A slight majority still believe the economic situation will be better in six months, but many of them have simultaneously lowered their expectations for sales development: "I was fairly convinced that we were heading towards better times and a more normal existence. But now there is a much greater risk that we will again face this cost pressure. That is what I am most worried about." There are also companies hoping to benefit from the situation by "the vacation fund not being used to travel abroad to the same extent." The visitor industry and building materials trade have hopes for a so-called "mini-covid" where more people choose to "home-stay" or renovate their homes. Slack labor market Overall, companies are waiting with both recruitment and reducing staff. The staffing and consulting industry argues that there is "a certain caution as a pattern" in companies' demand for labor. There are those reducing staff "and it is linked to cost awareness in the company given that the economy has not fallen out as planned." At the same time, there is high and increasing demand for labor in growing sectors. There are isolated examples of companies that have reduced their staff due to AI, but for most, it is rather an indirect reduction: "It is not that we reduce staff in any way... However, perhaps we do not hire quite as much." Costs are expected to increase gradually The speed at which higher costs affect operations depends partly on whether companies have secured access to raw materials, materials, and fuels. Overall, companies selling to other businesses already see increased costs, while companies selling to households are not as affected so far, see Diagram 3. In the durable goods trade, seasonal purchases are made in advance, which delays the impact of higher purchase costs. Many of the goods now in stock and in stores were purchased last autumn when the krona exchange rate was relatively favorable. Purchase costs for coffee and dairy products have also come down and contribute to lower costs in the grocery trade.

Riksbank's Business Survey May 2026 8 Diagram 3. Average unit costs, the last three months Index Note. The diagram shows the moving average of three observations. "Even if there is peace today, there are cost increases that will need to be passed on" Companies assess that cost increases will be more noticeable during the autumn and early 2027. How the war develops and how long it lasts is decisive for how long costs are expected to remain elevated and how companies choose to handle them. Apart from fuel, costs have increased for, for example, plastic, ammonia, and aluminum. Here, some companies already face "markedly" higher costs. Construction companies see a shortage and therefore increased costs for materials used in asphalt production. "Energy hits all unit costs," says a service company, and expects increased costs going forward. Companies in the clothing and furniture trade point out that the cost of textiles will increase. Their suppliers, mainly in Asia, are more dependent on oil in production and have announced cost increases that will raise purchase costs in the future. In the grocery trade, purchase costs are expected to increase later, both via packaging and fertilizer. A respondent describes: "There is incredible pressure right now from all suppliers to raise product prices, and we are trying to resist as much as possible. But there is a basis and proof that goods have become more expensive for suppliers." The shortage of fertilizer is not expected to affect harvests this year, but it will affect harvests in 2027 and lead to higher costs for grain, vegetables, meat, and dairy products. "If you have disruptions in the [fertilizer] system, it has a multi-year impact, and we will get that, we have to be prepared for it," says a representative from the grocery trade.

Riksbank's Business Survey May 2026 9 Diagram 4. Companies' combined response patterns Index Note. The answers to the questions are placed along the "rungs" in the diagram where an index closer to the middle is worse. The historical averages are calculated from the date when the current question began to be asked. The notation -3m means the last three months, +3m means the next three months, and +6m means the next six months. Increased economic risks and discounts imply deterioration and thus lower indices. Increased costs are reflected in a lower index. The question about inventory size is answered only by manufacturing industry (finished goods inventory) and trade (merchandise inventory). Reduced inventory size implies a higher index. The questions about order intake are answered only by manufacturing and construction industries. For the questions about sales prices, the construction industry answers only the question about sales prices for twelve months (+12m). The answers from the other questions in the diagram come from all companies in the survey. "The AI boost means there has been a huge rise in prices that is problematic" Apart from rising costs from the war in the Middle East, several companies highlight that purchase costs for some other raw materials and precious metals continue to rise. Some also mention that there is a shortage of components such as data chips, semiconductors, and memory cards. This is partly because large orders were placed in connection with the expansion of data centers for AI operations. A business leader says, "What we see more now is a challenge regarding inflation on hardware, servers, and similar. It is probably more driven by US trade policy, and the AI boost means there has been a huge rise in prices that is problematic."

Riksbank's Business Survey May 2026 10 Price plans: "It is probably a bit early to say where we land" Companies are more cautious than usual in commenting on how sales prices may change in the future. Price plans are largely reflected in the uncertainty about the war, its duration, and how demand and costs will develop. Companies give a consistent picture that costs are expected to increase and that this is a factor in how they plan to change sales prices in the future, see Diagram 4 and 5. However, it is uncertain how much impact the increased costs will have on sales prices. A respondent argues that they "will of course try to push it onto the end customer, but it is probably a bit early to say where we land there." A slightly larger proportion now plans to raise prices more than normal compared to February, see Diagram 6. But most argue that prices will not change more often and they "do not see that there will be any large price increases." Diagram 5. Drivers behind pricing, next twelve months Net shares (left scale) and index (right scale) Note. The bars in the left scale show the net of answers to the question about whether the factor will affect prices up or down over the coming year. A bar above zero implies that the factor contributes to rising prices in the future and below zero that it contributes to falling prices. The indices in the right scale show a standardized value (mean = 100 and standard deviation = 10) of net totals, for companies answering the question about whether sales prices will be raised or lowered over the next twelve months. Companies selling to households refer to trade, and companies mainly selling services to households. The item "Costs" includes purchase costs, labor costs, energy costs, costs related to climate change, and costs for green/sustainable transition. The item "Other" includes, among other things, idle capacity and productivity development. "Probably a bit more price discussions" Among companies selling to other businesses, price plans are relatively unchanged since February, see Diagram 5. They describe that overall there is limited room to increase margins. "One tries to raise about as much as we see an increased cost against us." Several point out that more price discussions are happening now than before. To the extent possible, they also try to hold back cost increases from their

Riksbank's Business Survey May 2026 11 sub-suppliers. The sectors with stronger demand have instead better opportunities to pass on costs to customers. A business leader says: "We carried out an 'extra' price increase during the spring and no one questioned it." Diagram 6. Size and frequency of planned price changes Percent Note. The diagrams show the proportion of companies that answered that they raised sales prices in the current quarter, next quarter, or next twelve months. The questions began to be asked in autumn 2022. "In some cases we will take the hit ourselves, in some cases we will pass it on to the consumer" Among companies selling to households, a larger proportion than in February plans to raise sales prices, see Diagram 5. The grocery trade, whose sales prices have been in focus in connection with the temporary reduction in VAT on food, indicates that their suppliers cannot absorb underlying cost increases indefinitely. They need to eventually return to a "normal state" regarding pricing. The higher costs are also driving up sales prices for other companies selling to households. A representative from the durable goods trade says: "We are talking about price increases among them [Asian suppliers] of 10-15 percent, which in combination with higher freight costs naturally creates some margin pressure if one does not push it over to the consumer." A business leader reasons further that "we have strong finances and swallow cost increases from energy and transport if they are temporary, but raise if they persist for a while." Another quote from a trade representative is telling: "We review our prices, then it is case by case. At a more aggregated level, I would probably say that some of the effect will hit the consumer but not all." Households will notice the price increases in the autumn: "The first effect maybe one starts to see towards autumn, like before Christmas shopping, and then the more complete effect towards spring or spring season, from January onwards."

Riksbank's Business Survey May 2026 12 The starting point differs from the inflation surge in 2022 During 2021 and 2022, companies assessed that the economic situation was good with strong demand both globally and in Sweden. The favorable situation permeated the labor market, investment willingness, and profitability. Gradually, cost pressure built up from, among other things, rising world market prices for metals and raw materials, increased energy costs, and higher transport costs due to supply disruptions. Companies saw a clear need to compensate for cost increases. Industry raised sales prices more often and more than normal and perceived that there was greater acceptance for price increases. Companies in the durable goods trade were initially more cautious in their price plans. Their cost increases also came later due to seasonal purchases. A weak Swedish krona was also seen as an explanation for their increased costs. It was uncertain how much...