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Economic Background - Sweden has long “enjoyed” the perception of being an expensive welfare state with high taxes. Changes over the last decade have changed the basis of these assumptions. Sweden opted; similar to the UK to keep its currency outside the Euro, but has all the advantages of the EU markets. After a painful recession in the early 1990s, and a pro-active attitude in view of a graying population, the government has adopted long-term policies to aid sustainable and solid economic growth. Support for environmental care, employment and investment in research and innovation, has transformed the economic panorama in the last decade resulting in macro-economic stability and healthy public finances. These opportunities have resulted in a considerable (7 times increase) in FDI (foreign direct investment) [1] in the last decade. In a 2002 estimate, UNCTAD concluded that Sweden had the world’s second best potential after the US for attracting foreign investment, and is rated with Ireland as one of the most “globalised” economies. The economic prospects (and with that, the longer term prospects for investment in Swedish property) are to a substantial degree dependent on international competitiveness. In September 2005, the World Economic Forum (WEF) rated Sweden 3rd on international competitiveness after Finland and the USA (compared with 13th position for the UK, 15th for Germany and 30th for Ireland). This index is highly dependent on R&D, investment in science and innovation. With 4 out of the 6 top places taken by Northern European countries, this region of Europe is very well equipped to further improve its economic performance, to an extent that may soon justify the qualification “Nordic Tiger”.
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Nordic Tiger – Sweden hosts one of the world’s most internationally integrated economies. Sweden is the economic engine of Northern Europe, at the heart of Baltic region (which includes Sweden, Denmark, Finland, Norway, Lithuania, Latvia and Estonia) that has consistently outpaced the euro area both in growth and macroeconomic performances. The integration of the emerging economies such as Lithuania, Latvia and Estonia within the more mature markets of Scandinavia has created a new, rapidly growing Baltic Sea Region. Sweden receives nearly 50% of FDI into the region (15th largest recipient of FDI in the world). Sweden, on a per capita basis, is home to more multinational companies than any nation in the world. Starting with Alfred Nobel's multinational dynamite empire in the mid-1800s, Swedish companies have continually expanded abroad, many of them becoming world giants in their fields 2/3rds of the fortune 100 companies that operate in the Baltic Sea region choose Sweden to be their regional head quarters. Macro Economics – Since the mid 1990’s, Swedish fiscal and monetary policies have focused on maintaining a stable macroeconomic environment in order to achieve sustainable and solid economic growth. The government’s finances are balanced. Sweden’s current account surplus runs at almost 8% of GDP. Large public investments have been made in education, R&D, and infrastructure. The national pension system has been reformed. The Central Bank’s independence has been strengthened. Strict government spending controls have been imposed under parliamentary control.
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The results have been satisfying. Economic growth has outpaced the OECD average for the last ten years. Inflation rates over the last five years are amongst the lowest of all EU countries (2005 EU inflation average 2.2% and Swedish inflation rate 1.7%), contributing to keeping interest rates low. Growth Expectations – An overall surge in exports, consumption and investment characterized the Swedish economy in 2005, with GDP growth estimated at 2.7% by the National Institute of Economic Research. This healthy growth is expected to continue over the next couple of years, with growth rates at 3.6% in 2006 and 3.1% in 2007. Diversified and Productive – Sweden’s core industries in pharmaceuticals, automotive, pulp and paper, steel, energy, chemicals and heavy manufacturing have formed the back bone of the economy. Whilst these industries continue to play an important role, today they are complemented be the technology, financial and retail sectors, which have experienced rapid growth. Over the past decade, Sweden has posted one of the fastest productivity growth rates in the world, partly as a result of its skill in applying information technology. Innovation and Research and Development – Sweden is today regarded as one of the world’s most knowledge-based economies. Sweden invests more in R&D, at 4.3% as a proportion of GDP than any other OECD country and ranks number one in innovation performance among EU member countries, according to the European Commission. Invest in Sweden Report 2004/05, Business and Investment Opportunities
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