Swedish government raises GDP forecast ahead of September election

STOCKHOLM, Aug 27 (Reuters) - Sweden's centre-right coalition raised its forecast for GDP growth ahead of an election next month and said its policies to boost households and businesses meant Sweden's economy would outpace European rivals over the coming four years.

In a fresh forecast on Thursday the government said its GDP growth would be 2.5%, up from 2.3% seen in June. It continued to see growth of 2.5% in 2027.

"Sweden is in a significantly stronger position than it was in 2022," Finance Minister Elisabeth Svantesson told reporters.

"It is stronger in terms of economic indicators such as inflation, stronger in terms of the current recovery, and is now seeing growth that is relatively high compared with many, many other countries," she said.

The EU is expected to see growth of around 1.1% this year.

Sweden's government will hope its bullish message on the economy helps turn around its deficit in the polls ahead of the September 13 vote.

Like many other countries, Sweden has been suffering a cost-of-living crisis that followed the COVID pandemic.

The government has cut taxes on fuel and VAT on food and raised in-work tax credits, and it is promising more measures to boost households' purchasing power - like free kindergarten places and more in-work tax credits - if it wins re-election.

But despite inflation slowing back below 1%, stronger growth and an improving labour market, households remain gloomy - particularly those on lower incomes.

The latest poll on Thursday showed the ruling coalition and the Sweden Democrats garnering 45.6% of the vote. The opposition is on 52.4%.

($1 = 9.5201 Swedish crowns)

(Reporting by Simon Johnson and Anna Ringstrom, editing by Terje Solsvik and Hugh Lawson)