(Xinhua) -- Sweden's economy is still in a slump, largely because exports are not fueling a recovery, and business investment is down, the National Institute of Economic Research said in a forecast released Wednesday.

But the institute predicted that exports would pick up in 2015 as will the domestic construction sector.

The forecast also said that despite the weak economy, employment has been strong and estimated that between 2015-2018 employment will increase by about 1 percent annually.

However, the institute added that unemployment is still high and estimated it will be at about 6.5 percent in 2017 and 2018.

Inflation is expected to increase from 0.6 percent this year to 1.5 percent in 2015, the institute said. It also predicted that the Riksbank, Sweden's central bank, will not increase its key repo rate until late in 2015.

Following the September 14 national election, the institute said it expects tighter fiscal policy.

This article was produced by China's state-controlled news agency Xinhua.