In the Spotlight: The Swedish Economy

Economic climate of Sweden, 2017

A brief insight into the economic climate of Sweden in 2017.

Fast Facts on Sweden:

  • An OECD High Income Country
  • Population: 9,798,871
  • World Bank Ease of Doing Business Ranking 2017: 9

In recent years, the Swedish Economy has experienced continuous growth, a decreasing unemployment rate and improvements in innovation capabilities. Although the country has felt the impacts of various international events in recent years, the nation has been able to overcome these obstacles to a degree that has allowed for continuous prosperity. There have been certain issues that have tested the resilience of the country more so than others, and there are more to come in the foreseeable future.

 

As of 2017, Sweden’s economy has been growing strongly due to persistent domestic demand, a growing labour force and rising productivity. Sweden continues to see improvements in unemployment, which is forecast to stabilise at 6.6% in 2018. Much of the available labour force is being exhausted in Sweden, with some industries experiencing a shortage of available skilled workers. The unemployment rate for foreign-born people is notably higher however, with some surveys finding up to 22% of foreign-born persons experiencing unemployment.  These statistics point toward the difficulties Sweden has experienced in regards to the large influx of immigrants over the past few years.

Inflation has been kept below the targeted 2% and Sweden’s government balance continues to do well with an overall surplus. Economic growth in Sweden is looking to continue over the next few years, with a slight slow-down. Sweden’s most pressing issues to date include difficulties employing low-skilled workers and the increasing risk of its debt-financed housing boom. In regards to the job market, a larger share of unemployment belong to low-skilled workers. These low-skilled workers will have an increasing difficulties looking for jobs, especially as Sweden’s high-tech service industry target high-skilled employees.

 

In regards to the housing boom, the number of homes built in 2016 reached a 30-year peak, however growth in housing investment is forecast to slow to 3.7% in 2018. Low interest rates, among other things, have led to large increases in housing prices and consequently rising household debt. In real terms, there are housing shortages in numerous areas. Measures are in place to strengthen control over housing prices, however more has to be done in regards to easing rental regulations, planning and increasing housing supply. Addressing household debt is also important in ensuring households are not exposed too vulnerably to a potential decrease in housing prices.

Doing Business in Sweden

In 2017, Sweden is set to keep its World Bank Ease of Doing Business ranking at #9 worldwide. According to the World Bank, starting a business in Sweden requires 3 procedures , takes 7 days, and costs 0.5% of income per capita for both men and women equally. The most common legal form of starting a company is an Aktiebolag Privat, which has a 50,000 SEK capital requirement. Overall, it is the speed at which one is able to start a business in Sweden that is the main advantage. There is in fact legislation in place that requires the company registry to register companies within 5 days of an application.

Ease of Doing Business Scores for Sweden (Source: World Bank)

Sweden struggles in the category of “Getting Credit” with a score of 75. In calculating the ease at which one may obtain credit, there are two categories the World Bank focus on: the strength of legal rights and the depth of credit information. If you wish to know more about the methods of the Ease of Doing Business rankings, you may read the full report here.

 

Aside from the ease of doing business, the Swedish consumer market is very receptive to businesses. Sweden is highly regarded as a forward-thinking and open market wherein new products and services can be sufficiently tested. As consumers, Swedes are globalised and keen to try new trends at home and from abroad. Swedish society is furthermore, highly innovative, meaning that a large portion of the population are familiar with the use of high-tech services. This has resulted in a growing increase in e-commerce sales – roughly one third of people living in Sweden make a purchase online every month.

 

Current consumer trends in Sweden:

  • Sustainability & Environment 
  • High-quality products
  • Lifestyle concepts
  • E-commerce

 

Want to do business in Sweden? Important things to consider include: what type of  legal form your company will hold, the registration requirements, tax laws, employer requirements and operational details. Desk Research Group is equipped to guide you along this process through our consultancy services. 

Leave a Reply