Sweden: Macroeconomic Country Outlook
- According to GlobalData, the country’s economic growth is forecast to slow down to 2.7% in 2022, due to Russia’s invasion of Ukraine.
- Sweden was ranked fourth out of 152 nations in the GlobalData Country Risk Index (GCRI) Q2 2022.
- The manufacturing and mining sector grew by 3.9% in 2021 and is forecast to grow by an average annual rate of 3.2% during 2022–23.
Sweden boasts a highly diversified and open economy. The government has undertaken several measures to increase Sweden’s attractiveness to foreign investment and economic competitiveness. Despite the ongoing global disruptions, Sweden attracted total investment of $27 billion in 2021 compared to $18.8 billion in the previous year.
Key findings
- Swedish economy on recovery path: According to GlobalData, the economy has caught up with its pre-pandemic level and expanded by 4.8% in 2021, fueled by removal of COVID-19-related restrictions along with continued rebound of consumption and investment in the country. According to the Statistics Sweden, the economy grew by 3% on an annual basis in Q1 2022. However, the economy is forecast to grow at a slower pace of 2.7% in 2022, due to the impact of Russia’s invasion of Ukraine through rising energy and food prices, reduced trade and increased uncertainty in financial markets.
- Sweden’s regional development cooperation with Africa 2022–26: In April 2022, the country allocated $5 billion for activities to be implemented by the Swedish International Development Cooperation Agency (Sida). The objectives include: (i) Environment, climate and sustainable use of natural resources through improved adaptability and strengthened resilience to climate change (ii) Human rights, democracy, the rule of law and gender equality by increasing awareness and empowerment of women and girls, including reduced corruption (iii) Migration and development through improved capacity to deal with all dimensions of migration (iv) Inclusive economic development to boost inclusive and sustainable trade along with regional and continental economic integration as well as food security (v) Peaceful and inclusive societies.
- Sweden ranked 10th out of 190 countries in the World Bank’s doing business ranking for 2020: According to the 2020 Doing Business Report, the country’s score was 82 out of 100 in terms of doing business. It takes 7.5 days to start a business in Sweden as compared with the OECD high income average of 9.2 days. The number of days to get a construction permit in Sweden is 117 as compared to the OECD high income average of 152.3 days. Sweden ranked 10th in terms of getting electricity, ninth in terms of registering property and 18th in terms of trading across borders (out of 190 countries).
- Sweden leads innovation sector: According to the World Intellectual Property Organization, Global Innovation Index (2021), Sweden ranked second among the 132 countries. The index measures the detailed metrics of innovation performance of 132 countries. Sweden was ranked second on innovation parameter. Moreover, the country secured second rank among the 51 high-income group economies, and 39 economies in Europe. The country secured third position on various indicators, which include Gross expenditure on R&D, % GDP, knowledge workers, knowledge-intensive employment, % firms offering formal training, % global brand value, top 5,000, % GDP and school life expectancy, years.
- Sweden – The first cashless Society: The annual value of card transactions in the Sweden cards and payments market was valued at $126.8 billion in 2021. The market is projected to grow at a CAGR of more than 4% during the period of 2021–25, according to GlobalData. Sweden’s cards and payments industry is well developed and mature, with Swedish consumers are prolific users of payment cards. Growth in the payment card market has been supported by combined efforts of the Swedish government and banks to promote card payments and improve payment card acceptance infrastructure. In May 2022, Swedish FinTech startup Juni entered into a partnership with UK payment solutions provider B4B Payments to empower eCommerce.
- Step towards renewable energy: In May 2022, the government provided a renewed and expanded license from 30 years to 35 years to a state-owned utility, Vattenfall in order to build a windpark off the southern coast of Sweden. The windpark aims to produce enough power for around 500,000 homes each year in the country through an estimated production of 2.3-2.8 TWh of electricity each year. In May 2022, Vattenfall inaugurated the 353MW Blakliden Fabodberget project (onshore wind farm) in Sweden. During the same month, Danish engineering consultancy COWI A/S and Swedish Biofuels AB are expected to build three plants to produce and supply sustainable aviation fuel (SAF). They plan to supply 400,000 tonnes of SAF per year in Sweden by 2025.
Key fundamentals
Sectoral outlook
- Outlook for Sweden’s tourism industry: According to the World Economic Forum, Travel and Tourism Index (2021), the country secured 20th rank among 117 economies. In October 2021, the Swedish government presented a plan to make Sweden the world's most attractive tourism destination by 2030. The plan includes the climate impact of tourism, equality and inclusion in the tourism industry and the importance of preserving shared resources such as national parks and sustainable nature tourism such as fishing and hunting. Moreover, the government plan also includes a focus on jobs and skill development in the tourism industry. In April 2022, the Government of Sweden announced removal of all pandemic protocols and start welcoming travelers from abroad. In May 2022, Sweden and Egypt announced to boost their tourism sectors. In May 2022, Sweden held a meeting with Greece, Norway and Denmark to enhance the tourism market. According to GlobalData, international tourist arrival to the country grew by 30% in 2021 and is further forecast to grow by 98.1% in 2022 and 20.3% in 2023.
- Automotive industry and e-mobility sector expected to rise: Sweden’s rich vehicle manufacturing heritage offers a winning environment for automotive operations, for production, software development, safety systems, components supply, testing and R&D. Sweden is one of the top countries in Europe for the use of renewable energy in transport and has set the target of a zero carbon vehicle as well as nearly 5 million passenger cars would gradually be replaced by zero-emission electric vehicles by 2030. In February 2022, Volvo Cars and Northvolt announced to build a battery manufacturing plant in Gothenburg, Sweden, with construction set to begin in 2023. The plant is expected to supply batteries for around 500,000 cars every year. In February 2022, Volvo Cars anticipated a plan to invest $1.1 billion in its manufacturing plant for production of fully electric cars. The company hopes that 50% of its sales would be of pure electric cars by the middle of this decade to reach 100% by 2030.
- Continued push towards development and implementation of renewable energy sector in Sweden: As reported by the Swedish Energy Agency, with 50% of the energy used in Sweden coming from renewable sources in 2020, the country tops the European Union. Much of this is due to more extensive use of biofuels, particularly to produce electricity and heating, and by the forestry industry. Sweden aims to meet 100% of its electricity needs from renewable sources by 2040. In May 2022, Helios signed a contact with Commerz Real to provide a turnkey delivery of the two largest utility scale solar parks in Sweden. The first plant will have an installed capacity of approximately 21.7MWp (megawatt peak), which is located in Vasteras municipality and the second park is located in Tierp municipality, which would have an installed capacity of 47.3MWp. The two solar farms are due to go online in 2023. Their combined output is estimated to be equal to consumption of 8,500 local homes.
GlobalData Country Risk Index (GCRI) – Q2 2022
Sweden was ranked fourth out of 152 nations in the GCRI Q2 2022. The country’s score is in the low risk nations band (below 30). Sweden’s overall risk score of 20.6 was lower than the Western Europe (26.1) and the world average (44.0) in Q2 2022. The country has the lowest risk score in political and environment risks (11.2), followed by technology and infrastructure (18.7), macroeconomic risks (19.7), among others.
GCRI Methodology
GlobalData’s unique Country Risk Model determines the existing and future level of country risk by assessing various qualitative and quantitative factors. The index is designed to help firms formulate their global business strategies on the basis of historical developments in an economy.
The Country Risk Index incorporates the latest available macroeconomics, political, social, technological, environmental, and legal data from a range of recognized national and international statistical sources and incorporates proprietary data from GlobalData. Western European countries in this publication include Austria, Belgium, Denmark, Finland, France, Sweden, Greece, Italy, the Netherlands, Norway, Portugal, Ireland, Spain, Sweden, Sweden, Luxembourg, Iceland, and Switzerland.
About the report
GlobalData Macroeconomic Outlook report is designed to provide detailed macro-economic analysis which will help clients in their business planning, investment and strategic decisions, and analysis. It also provides a quick view of the current situation and the risk score of the country in comparison to region and world based on the proprietary risk framework. The report also highlights key strengths, weaknesses, opportunities, and threats in each of the pillars of PESTLE, economic growth prospects, and key events which can impact the country’s future outlook.
More details: Macroeconomic Outlook Report: Sweden
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