A military power during the 17th century, Sweden has not participated in any war for two centuries. An armed neutrality was preserved in both world wars. Sweden's long-successful economic formula of a capitalist system intermixed with substantial welfare elements was challenged in the 1990s by high unemployment and in 2000-02 and 2009 by the global economic downturns, but fiscal discipline over the past several years has allowed the country to weather economic vagaries. Sweden joined the EU in 1995, but the public rejected the introduction of the euro in a 2003 referendum.
Northern Europe, bordering the Baltic Sea, Gulf of Bothnia, Kattegat, and Skagerrak, between Finland and Norway
iron ore, copper, lead, zinc, gold, silver, tungsten, uranium, arsenic, feldspar, timber, hydropower
Population - distribution
most Swedes live in the south where the climate is milder and there is better connectivity to mainland Europe; population clusters are found all along the Baltic coast in the east; the interior areas of the north remain sparsely populated
STOCKHOLM (capital) 1.486 million (2015)
- Conventional long form
- Kingdom of Sweden
- Conventional short form
- Local long form
- Konungariket Sverige
- Local short form
parliamentary constitutional monarchy
- Geographic coordinates
- 59 20 N, 18 03 E
- Time difference
- UTC+1 (6 hours ahead of Washington, DC, during Standard Time)
- Daylight saving time
- +1hr, begins last Sunday in March; ends last Sunday in October
accepts compulsory ICJ jurisdiction with reservations; accepts ICCt jurisdiction
Sweden has achieved an enviable standard of living with its combination of free-market capitalism and extensive welfare benefits. Sweden remains outside the euro zone largely out of concern that joining the European Economic and Monetary Union would diminish the country’s sovereignty over its welfare system. Timber, hydropower, and iron ore constitute the resource base of an economy heavily oriented toward foreign trade.
- Total tax rate (% of commercial profits)
- Real Interest Rate
- Manufacturing, value added (% of GDP)
- Current Account Balance
- US$ 23,653,028,753
- Labor Force, Total
- Employment in Agriculture
- Employment in Industry
- Employment in Services
- Unemployment Rate
- Imports of goods and services
- US$ 203,230,167,436
- Exports of goods and services
- US$ 226,867,775,119
- Total Merchandise Trade
- FDI, net inflows
- US$ 17,637,384,336
- Commercial Service Exports
- US$ 71,397,480,842
barley, wheat, sugar beets; meat, milk
iron and steel, precision equipment (bearings, radio and telephone parts, armaments), wood pulp and paper products, processed foods, motor vehicles
- machinery 35%, motor vehicles, paper products, pulp and wood, iron and steel products, chemicals (2012 est.)
- Norway 10.3%, Germany 10.3%, US 7.7%, UK 7.2%, Denmark 6.8%, Finland 6.7%, Netherlands 5.2%, Belgium 4.4%, France 4.2% (2015)
- machinery, petroleum and petroleum products, chemicals, motor vehicles, iron and steel; foodstuffs, clothing
- Germany 17.9%, Netherlands 8.1%, Norway 7.8%, Denmark 7.7%, China 6%, UK 5.5%, Finland 4.6%, France 4.3%, Belgium 4.3% (2015)
- Country Risk Rating
- The political and economic situation is very good. A quality business environment has a positive influence on corporate payment behavior. Corporate default probability is very low on average.
- Business Climate Rating
- The business environment is very good. Corporate financial information is available and reliable. Debt collection is efficient. Institutional quality is very good. Intercompany transactions run smoothly in environments rated A1.
- Open, diversified and competitive economy
- Specialization in high-tech products and green economy
- Sound public finances
- Increasingly dynamic demographics
- Highly concentrated banking sector
- Tensions on the real estate market
- Significant household debt
In 2017, activity is expected to slightly slow, due to less dynamic demand than in 2016. Private consumption will be affected by slower wage growth and the decline in unemployment (6.4% in November 2016). However, this will remain high due to the continuation of the Riskbank's (Central Bank) accommodative monetary policy as well as a significant immigration. The country has welcomed a large number of migrants (about 300,000) since 2015, although migration policy will be more restrictive in 2017. However, integrating these migrants in the labour market is likely to take some time, which will limit the decline in unemployment, especially among non-European and low-skilled workers. Moreover, the rise in property prices should be more moderate than before, because of the Government's desire to reduce household debt levels (175% of gross disposable income) by introducing new rules to limit mortgage loans.
Overall investment is expected to continue to grow in 2017, although more moderately than in 2016 (6.6%). Residential investment will be slightly less dynamic (while remaining firm), due to a shortage of labour, which will hamper the construction sector, while the automotive and pharmaceutical sectors will fare better.
Meanwhile, the contribution of foreign trade to growth is projected to remain neutral in 2017.
Despite a further depreciation of the krona in 2016, which pushed up the price of imported goods, the Central Bank is worried about the weakness of inflation. As a result, the Riskbank may ease its monetary policy still further (deposit interest rate in November of -0.5%), in order to bring inflation gradually back close to its target (2%).
Fiscal policy will remain relatively neutral due to the favourable economic climate, which is expected to keep the budget in balance in 2017 and slightly reduce the public debt. Nevertheless, the 2017 budget contains a number of measures aimed at supporting domestic demand. The drop in the number of migrants entering the country in 2017 will help to target spending better on facilitating their integration, without, however, impacting on the public finances.
This budget also provides for higher spending on education, improving access to the internet in rural areas as well promoting research and innovation. This moderate increase in government spending (of the order of USD 3 billion) will be offset by higher tax receipts, particularly from corporation tax and higher taxes on alcohol and fuel. In addition, the Government's aim of dispensing totally with fossil fuels by 2030 is being delivered through incentives to recycle and invest in renewable energy. It is worth noting that the share of the latter in the supply of energy is among the highest in the OECD.
The current account surplus is also set to remain stable in 2017, at a very comfortable level. Imports will still be firm, buoyed by growing domestic demand, but will, nonetheless, be offset by stronger exports, due to the moderate growth in demand from the country's main trading partners. However, a slowdown in demand from the United Kingdom (3rdlargest trading partner), after Brexit, could affect the trade balance through a decline in exports.
The Swedish banking sector is well capitalised but highly concentrated: the country's four major banks hold about 75% of assets, which represents 255% of GDP. The banking system will therefore present a high risk as household debt is high and property prices are still rising (danger of the bubble bursting).
Despite a favourable economic climate, the centre-left coalition is increasingly discredited. The Sweden Anti-Immigration Party has climbed in the polls by criticizing the current government's immigration policy. They also want a referendum, similar to that of the United Kingdom, on getting Sweden out of the European Union. However, this party remains fairly isolated in the political landscape and a poll in October 2016 suggests that Swedes are opposed to a withdrawal from the EU. The coalition government could, therefore, stay in place until the next parliamentary elections due to be held in September 2018.
The business climate ill remain very favourable in this country, which is ranked 9th in the latest World Bank Ease of Doing Business Index.