Sweden enjoys excellent macroeconomic performance with high rates of growth and stable inflation expectations. However, tensions are visible at the margin. Joblessness is widespread among immigrants and youngsters, and disability and sickness rates are comparatively high. Combating exclusion both in the labour and housing markets is a key challenge for policymakers. Early steps in regulatory reform, taken in the 1990s are paying off in terms of productivity and GDP, but renewed regulatory reform is needed inter alia to address the low rate of business formation. Progress on this reform agenda – employment in particular – is vital also for the long-run fiscal outlook which is shaped by population ageing. This chapter identifies such key challenges after first assessing recent macroeconomic developments including the housing and construction boom.