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Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Despite Sweden's exposure to global trade dynamics, Covid-19 has had a rather limited impact on its economy compared with most other European countries. In 2021, the continued rebound of consumption and investment contributed to an estimated growth of 4% (with the economy returning to its pre-pandemic level by the third quarter of the year). GDP growth is projected to reach 3.4% in 2022, before easing to 2.8% as the post-pandemic catch-up dissipates, with private consumption as the main growth driver (IMF).

Sweden is among rare advanced economies to show both a current account surplus and low public debt in Europe. Monetary and fiscal policies have been supportive since the outbreak of the pandemic, hence the government budget turned negative (-2.4% of GDP in 2021). The 2022 budget increases spending by SEK 74 billion (1.5% of GDP), and includes tax cuts for low-income earners and grants to municipalities to fight the pandemic. A rise in revenues and increased GDP will balance these expenses so that the IMF forecasts the deficit to gradually decrease to -0.7% this year and -0.2% in 2023 (grants from the EU Recovery and Resilience Facility should total around 0.2% of GDP in 2022 and 2023). The country’s debt-to-GDP ratio, although still low, reached 39.6% in 2021, from a pre-pandemic level of 34.9%, and is expected to gradually decrease over the forecast horizon (39.9% and 39% in 2022 and 2023, respectively). Driven largely by higher energy costs, inflation stood at 2% in 2021 but is projected to fall below Riksbank’s 2% target this year (1.6%).

Job creation was impacted by Covid-19 as the services industry slowed activity even when Sweden opted against nationwide lockdowns. The government's compensation schemes limited further unemployment, which was estimated at 8.9% in 2021 by the IMF, while wages, which are largely centrally negotiated, have increased only slightly faster than before the pandemic. The rate is projected to decrease to 7.9% this year and 7.7% in 2023. Overall, Swedish citizens enjoy a high per capita GDP of USD 55,566 (PPP – 2021), 18.5% higher than the EU’s average (USD 46,888), and the European Anti-Poverty Network (EAPN) estimates that only 2% of Sweden’s population lives in serious material poverty conditions.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 533.88e541.06e622.37660.92711.24
GDP (Constant Prices, Annual % Change) 2.0e-2.84.03.42.8
GDP per Capita (USD) 51,69452,129e58,63961,68165,770
General Government Balance (in % of GDP) -0.4-2.6-2.4-0.7-0.2
General Government Gross Debt (in % of GDP) 34.937.3e39.639.939.0
Inflation Rate (%) 1.70.72.01.61.7
Unemployment Rate (% of the Labour Force) 6.88.38.97.97.7
Current Account (billions USD) 29.1630.9029.8528.4826.87
Current Account (in % of GDP) 5.55.7e4.84.33.8

Source: IMF – World Economic Outlook Database , October 2021

Note: (e) Estimated Data

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

Agriculture represents 1.4% of the GDP and employs 1.7% of the workforce (World Bank, latest data available). The main agricultural products are grains (particularly oats, wheat, barley, and rye), potatoes and other root crops, vegetables, and fruits, as well as dairy products, meat and wood. While production exceeds domestic consumption, a significant amount of food needs to be imported due to a lack of crop variety. Sweden has a wealth of natural resources: forests, iron, lead, copper, zinc and hydroelectric energy. The country has 3,021 thousand hectares of agricultural area and 27,980 thousand hectares of forest area (FAO), with a total of 62,937 agricultural holdings (Statistics Sweden, latest data available).

The industrial sector contributes 21.1% of GDP and employs 18.4% of the workforce. It is dominated by groups such as Volvo, Saab, Ericsson, ABB, AstraZeneca, Electrolux, Ikea, H&M, etc. Sweden's main manufacturing activities are steel, automotive, chemical, forestry, industrial machinery and equipment, automation and food processing equipment. The World Bank estimates that the manufacturing sector alone accounts for 12.1% of GDP. The new technologies and biotechnologies sectors are also of significant importance in the economy.

The tertiary sector, driven by telecommunications and IT equipment, employs 79.9% of the active workforce and contributes 76.1% of GDP. The banking sector is comprised of a total of 121 banks, including 42 commercial banks, 32 foreign banks, 45 savings banks and two co-operative banks (European Banking Federation). Before the pandemic, the travel and tourism industry was estimated to account for 9.7% of the country’s GDP; however, the sector was severely affected by the consequences of the pandemic.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 1.7 18.4 79.9
Value Added (in % of GDP) 1.4 21.1 66.1
Value Added (Annual % Change) 1.1 -3.6 -3.0

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
Swedish Krona (SEK) - Average Annual Exchange Rate For 1 USD 8.568.558.699.509.21

Source: World Bank - Latest available data.

 

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Foreign Trade

Swedish economy is very open to foreign trade, which represented 85% of its GDP in 2020 (World Bank). In the same year, exports were led by motor cars (7.3%), medicaments (5.9%), petroleum oils (3.5%), telephones (3.2%) and motor vehicle parts (2.7%); with wood and paper products as a whole accounting for 10.1% of exports. Automobiles were also among Sweden's top imports (5.6%), followed by telephones (4.2%), petroleum oils (3.8%) and motor vehicle parts (3.4% - Comtrade).

Norway and Germany were the top destinations for Swedish exports in 2020 (10.5% and 10.4%, respectively), ahead of the U.S. (8.1%), Denmark (7.5%) and Finland (7%). Germany remained the largest supplier of goods to Sweden (18.1%), followed by the Netherlands (9.7%), Norway (9%) and Denmark (6.8%). The European Union as a whole is Sweden's biggest trading partner and the country has a structural deficit from its trade with the EU, which accounted for 52.1% of exports and 67.7% of imports. Overall, Sweden’s exports of goods to EU27 decreased by 7% as imports decreased 6% (Statistics Sweden).

Sweden has a structurally positive trade balance: in 2020, the country recorded a trade surplus accounting for nearly 4.6% of its GDP (up from 4.2% one year earlier - World Bank). Imports of goods hit USD 149.9 billion in 2020, against USD 159 billion a year earlier (-5.7%), whereas exports edged down to USD 155.6 billion from USD 160.5 billion during the period (-3%). As for services, imports lost 8.5% (at USD 68.1) while exports declined at a slower pace (-7.4%) totalling USD 69 billion. According to provisional data from Statistics Sweden, in the period January–September 2021, the value of Swedish exports of goods amounted to SEK 1,181 billion, an increase of 12% vis-à-vis 2020. At the same time, the value of imports of goods increased by 14% and amounted to SEK 1,151 billion. The net trade surplus stood at SEK 30 billion against SEK 44 billion recorded in the first three quarters of 2020.

 
Foreign Trade Values 20162017201820192020
Imports of Goods (million USD) 140,347154,215170,605158,971149,880
Exports of Goods (million USD) 139,539152,920165,968160,576155,601
Imports of Services (million USD) 60,93367,60371,72774,50368,144
Exports of Services (million USD) 71,77373,33273,12174,54268,994

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20162017201820192020
Foreign Trade (in % of GDP) 82.384.989.191.484.5
Trade Balance (million USD) 8,47211,16211,15618,17921,115
Trade Balance (Including Service) (million USD) 16,10714,62512,72721,71822,398
Imports of Goods and Services (Annual % Change) 4.54.73.82.1-5.7
Exports of Goods and Services (Annual % Change) 2.44.14.26.0-4.6
Imports of Goods and Services (in % of GDP) 39.641.243.443.640.0
Exports of Goods and Services (in % of GDP) 42.743.745.747.844.6

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20212022 (e)2023 (e)2024 (e)2025 (e)
Volume of exports of goods and services (Annual % change) 8.84.33.32.82.9
Volume of imports of goods and services (Annual % change) 7.24.74.33.43.1

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
Sweden is a member of the following international economic organisations: IMF, European Union, ICC, G-9, G-10, OECD, Schengen Convention, WTO, among others. For the full list of economic and other international organisations in which participates Sweden click here. International organisation membership of Sweden is also outlined here.
Free Trade Agreements
The up-to-date list of Free Trade Agreements signed by Sweden can be consulted here.
 

Main Partner Countries

Main Customers
(% of Exports)
2020
Norway 10.5%
Germany 10.4%
United States 8.1%
Denmark 7.6%
Finland 7.0%
See More Countries 56.4%
Main Suppliers
(% of Imports)
2020
Germany 18.2%
Netherlands 9.8%
Norway 9.0%
Denmark 6.8%
China 6.2%
See More Countries 50.0%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
King: CARL XVI GUSTAF (since September 1973) – hereditary
Prime Minister: Magdalena ANDERSSON (since 30 November 2021) - SAP
Next Election Dates
Parliamentary: 2022
Current Political Context
In June 2021, the Swedish Parliament ousted Prime Minister Stefan Löfven with a no-confidence vote (for the first time in history) after the Left Party withdrew its support over the rent control reforms. Löfven chose to resign on 28 June and kept leading a caretaker government until July, when he was re-elected by the Riksdag. Nevertheless, in August Löfven announced its intention to resign from the post and in the month of November he was replaced by Magdalena Andersson, his former finance minister. Andersson was first appointed on 24 November but resigned just seven hours after taking office after failing to get parliamentary backing for her budget, with the coalition partner Greens quitting the government in response. However, she was voted in as prime minister a second time by parliament on 29 November, heading a single-party minority government consisting of her Social Democratic Party.
Main Political Parties

A party must gain 4% of the national vote or 12% of a constituency vote to enter the single-chamber parliament. Coalitions and minority governments are widespread. Social Democratic Party and Moderate Party are the largest parties in the parliament.

  • Social Democratic Party (SAP): centre-left, oldest and largest political party in Sweden; supports social democracy; its electoral base is among blue collar workers.
  • Moderate Party (M): centre-right; liberal-conservatism.
  • Green Party: centre-left, based on green ideology.
  • Liberals (L): centre-right; pushes for free market economy; supports the Eurozone, yet more recently has focused on gender equality issues and improving education.
  • Centre Party (C): centre-right; ideology described as "eco-humanism,”; focuses on agricultural, environmental, and rural issues.
  • Sweden Democrats (SD): right-wing; anti-immigration; advocates social conservatism.
  • Christian Democratic Party (KD): centre-right; looks to improve care of the elderly and family values; seeks to decrease corporate regulation and lowering taxes.
  • Left Party (V): left-wing; socialist and feminist.
  • Feminist Intitiative: Left-feminist.
Executive Power
The monarchy is hereditary. The King is Head of State but he exercises no political power and functions in an entirely ceremonial capacity. After a general election, the Prime Minister is first nominated by the parliamentary spokesperson before being confirmed for a four-year term by the Parliament (the King plays no role in this process). The Prime Minister is the head of the government and holds executive power. The Council of Ministers is nominated by the Prime Minister and then submitted for the approval of Parliament.
Legislative Power
The Swedish legislative power is unicameral. The Parliament, called Riksdag, has 349 seats and its members are elected by universal suffrage on the basis of proportional representation for a four-year term. The executive branch of government depends on the support of Parliament, often expressed by a vote of confidence. The Prime Minister can dissolve Parliament, even after receiving a vote of no confidence, unless elections took place less than three months before. Legislative power belongs both to the government and to Parliament. Swedish citizens enjoy considerable political rights.
 

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COVID-19 Country Response

COVID-19 epidemic evolution

To find out about the latest status of the COVID-19 pandemic evolution and the most up-to-date statistics on the COVID-19 disease in Sweden, please visit the website of the Swedish Public Health Agency (in Swedish). Further information can be found on the website of Statistics Sweden.
For the international outlook you can consult the latest
situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.

Sanitary measures

To find out about the latest public health situation in Sweden and the current sanitary measures in vigour, please consult the official portal Krisinformation, including the up-to-date information on the containment measures put in place and public health recommendations. Further information can be found on the website of the National Board of Health and Welfare (in Swedish).

Travel restrictions

The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.
The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.

Import & export restrictions

For the information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the website of the Swedish Customs (Tullverket). In order to consult the latest news concerning businesses, visit the website of the Ministry of Enterprise and Innovation.
The “Guidelines for border management measures to protect health and ensure the availability of goods and essential services” issued by the European Commission can be consulted
here.
For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to Sweden on the
International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan

For information on the economic recovery scheme put in place by the Swedish government to address the impact of the COVID-19 pandemic refer to the official Government’s platform. Further info can be accessed on KPMG's website.
The information on the EU’s economic response to COVID-19 and the actions to minimise the fallout on the EU member states’ economies of the COVID-19 outbreak is available on the websites of the
European Commission and the European Council.
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) taken by the Swedish government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Sweden in the
IMF’s Policy Tracker platform.

Support plan for businesses

To find out about the local business support scheme established by the Swedish government to help businesses to deal with the economic impacts of the COVID-19 epidemic on their activity, please consult the official Government’s platform, which also provides information regarding the crisis package for small enterprises, the crisis package for jobs and transition and the increased loan facilities and credit guarantees for Swedish businesses.
For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

Support plan for exporters

For the up-to-date information on possible support plans for exporters in Sweden, if applicable, please consult the website of the Swedish Export Credit (SEK), as well as that of the Export Credit Agency (EKN).
The European Commission adopted a Temporary Framework for State aid measures to support the economy in the COVID-19 outbreak, which enables short-term export credit insurance to be provided by the State where needed.

 

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