Foreign Direct Investment

According to UNCTAD's World Investment Report 2021, FDI inflows increased 158% in 2020, reaching USD 26 billion, up from USD 10 billion in 2019, despite the economic crisis triggered by the Covid-19 pandemic that caused a contraction of 42% to global foreign direct investments. This increase is partly the result of U.S. MNEs injecting loans into their affiliates in the country. The stock of FDI was about USD 409 billion in 2020. Sweden is the tenth-largest recipient of FDI but also the eleventh-largest investor worldwide. FDI outflows from the country reached USD 31 billion in 2020, compared to USD 16 billion in 2019. In terms of FDI stocks, the Netherlands, the UK, Luxembourg, Germany and Norway are the largest investors in Sweden. The manufacturing sector maintained its status as the backbone of foreign investment, followed by financial and insurance activities, wholesale and retail trade and the energy sector. According to the latest figures from OECD, in the first semester of 2021 FDI inflows to Sweden reached USD 17.5 billion, down by 22.1% compared to the same period one year earlier.

Despite the unfavourable international situation, the country maintains a high level of appeal to foreign investors, because of its multilingual and qualified workforce, very high per capita purchasing power, an economy at the forefront of new technologies and innovation, as well as its advantageous tax regime. The Swedish government has undertaken measures to develop support for investment, focusing on key sectors (biotechnologies and food processing), as well as rapidly growing markets (Baltic countries, India, Brazil, etc.). There are gaps in the food-processing field, as well as in the housing and interior design sectors. The government assigned the Inspectorate of Strategic Products (ISP) and the Swedish Defence Research Agency (FOI) with the monitoring of FDI in sensitive areas. Sweden is one of the few EU Member States that did not yet introduce FDI screening rules. However, in November 2021, proposed legislation was presented, which is expected to be approved over the course of 2022. As evidence of the quality of the Swedish business climate, the country ranks high on most international investment lists, including World Bank's latest Doing Business report (10th out of 190, two spots higher on the year), the AT Kearney 2021 Foreign Direct Investment Confidence Index (14th worldwide) and the Global Innovation Index 2021 (2nd worldwide, the country has been in the top 3 for over a decade).