The economy of Sweden is largely based on free market principles and is one of the most competitive economies in the world. It is a high-income economy with a GDP per capita of $61,549 in 2019, making it one of the wealthiest countries in Europe. Sweden has a strong export-oriented economy, with exports accounting for around two-thirds of GDP. The country’s main exports are machinery and transport equipment, chemicals, paper products and telecommunications equipment. Sweden also has a thriving tourism industry due to its stunning landscape and rich culture.
According to cheeroutdoor, Sweden has experienced strong economic growth since the mid-1990s, thanks to its well-developed infrastructure and sound macroeconomic policies. Inflation has been kept low and unemployment rates have been consistently below 5%. The Swedish economy is also highly diversified, with no single sector dominating the overall composition of output. The country’s main industries are manufacturing (including automotive), energy (including renewable energy sources), IT services, retail trade and telecommunication services.
The government plays an important role in Sweden’s economy by providing generous welfare benefits for its citizens as well as incentives for businesses to invest in research & development activities or environmental protection measures. The government also maintains a stable currency through its monetary policy, which involves setting interest rates at low levels so that businesses can borrow money cheaply to expand operations or hire new employees.
Although Sweden’s economy is generally very strong, there are some areas where it could be improved such as reducing inequality among households; increasing labor productivity; improving infrastructure; increasing foreign direct investment; introducing more flexible labor markets; investing more in research & development activities etcetera.. To achieve these goals the government needs to continue making sound macroeconomic policies while encouraging businesses to invest more into research & development activities or environmental protection measures going forward into generations beyond our own today.
Since the 1870s, Sweden has evolved from a poor agricultural country to a country with a high-tech industry, a very extensive service sector and ever-increasing exports.
The basis for economic development has been large natural resources, especially forest, iron ore and hydroelectricity, and the development has been promoted by political stability.
Sweden’s gross domestic product (GDP) has grown for a long time, although the pace has varied and some short negative periods have occurred.
Although Sweden’s population has a strong purchasing power, the domestic market is still limited. Sweden is therefore dependent on a comprehensive and well-functioning foreign trade.
Approximately 80 percent of goods exports comprise industrial goods, largely high-tech. In 2017, goods exports accounted for 45 percent of GDP; a slightly lower proportion than the EU as a whole.
The trade balance has shown large surpluses since the 1990s. Although the surplus has been reduced in recent years, it represented 21 percent of GDP in 2018.
- COUNTRYAAH: Find major trading partners of Sweden, including major exports and major imports with latest trade value and market share as well as growth rate.
International trade in services has increased sharply in the 2000s, which shows, among other things, that the service sector has also been globalized. The balance of services includes payments for international transport and tourism and also patent and license costs and insurance, and it has been positive since 2005. However, tourism’s foreign exchange net is negative, which shows that outgoing Swedes use more currency abroad than incoming foreign visitors do in Sweden.
The current account has shown surpluses since 1994. In 2017, the surplus was 3.3 percent of GDP. Internationally, this is a high figure which is considered to indicate that the country has a robust economy. Government debt as a share of GDP was just under 26 percent in 2018, internationally a low figure. Less than a fifth of the national debt is in foreign currency.
Economic growth and changes in employment
The modernization of agriculture during the first half of the 20th century took place in parallel with industrialization. During the 1960s, industry reached its largest share of the country’s employment. Subsequently, the share of employed persons in industry has decreased and employment in agriculture has continued to shrink as service industries have grown. Sweden has become a service society, and in the mid-2010s, the proportion of industrial employed is less than half of what it was in the 1980s.
From the 1940s, and especially during the 1960s and 1970s, the Swedish model emerged, an economic model based on close collaboration between the state, trade unions and companies. With a high level of taxation, care, schooling and care could be extended to everyone in the community. The public sector has grown and has accounted for a third of employment over the past 30 years. Other services have also increased their share of employment, partly as a result of increasingly extensive privatization, partly by state-owned companies and partly in schools and care.
The traditional division of employment and companies into the three main industries agriculture, industry and service is now less relevant. Above all, the boundary between the manufacturing industry and service is diffuse. It is common for engineering industries not only to sell a product but also to install, service and maybe even upgrade it. Large companies work closely with many customers by working with them to develop solutions and produce the necessary equipment. The concept of technology companies is increasingly used to capture the breadth of operations as a company is engaged in technology-heavy operations with both manufacturing and services.
The globalization of the economy
Major structural changes are still taking place in agriculture with the closure of smaller farms and conversion to either vegetable or animal production. The political goal was previously that Sweden should have an 80% self-sufficiency ratio. Nowadays, there is no such stated goal. Sweden is self-sufficient in cereals but imports about half of the meat demanded, most of the fruit and a significant portion of the vegetables. Food has increased its share of import costs. Self-sufficiency is now being discussed as one of a number of aspects of the country’s emergency preparedness.
Industrial production and, in particular, exports of input goods and high-tech finished products are still of great importance for the country’s economic development and thus also for the welfare of the residents. The industry, including mining industry, energy production and construction, has retained its share of GDP at the same time as operations have been automated and employment has declined. Sweden’s large export dependence places high demands on international competitiveness and makes the country extra vulnerable to what is happening abroad. The global financial crisis 2008–09 and the eurozone debt crises in the 2010s are examples of events that have had a negative impact on the Swedish economy.
A well-educated workforce and extensive investments in research and development (R&D) have been important for increasing productivity and for the specialization of Swedish business and industry. Swedish companies with subsidiaries abroad have increasingly made manufacturing and market contacts to other countries while their R&D operations have grown in Sweden.
The internationalization of the business sector is becoming clearer every year and Swedish entrepreneurship abroad has increased significantly. At the end of the 1990s, Swedish-owned international groups had more employees in Sweden than abroad. Now, twice as many work for Swedish subsidiaries in other countries (1.41 million in 2016) than for Swedish parent companies in Sweden (500,000). In 2016, more than 3,200 Swedish-owned groups had subsidiaries abroad. Nearly a third of these had subsidiaries in Norway and close to a fifth were established in Finland, Denmark or the United States. The trend then was an increase in corporate involvement in China. In 2017, there were close to 14,400 foreign-owned companies in Sweden, varying in size, with a wide breadth of operations and with a total of 672,400 employees. The smaller companies are mainly in the service sector, the larger ones there as well as in the manufacturing industry. The countries that are primarily involved in Swedish business in this way are Norway and the United States.
- Paulsourcing: Top 10 tips for doing business in Sweden, covering country profile and market entry requirement.
Large and small companies
The largest industrial and service companies play a greater role in the country’s business sector than the corresponding companies do in our neighboring countries. But large companies with over 250 employees make up only 0.1 percent of all companies. 35 percent of the country’s corporate employees work in large companies; a proportion that decreased during the 2000s. At the same time, the proportion of employees has increased in smaller companies.
Companies with fewer than 50 employees account for about 40 percent of the industry’s contribution to GDP, medium-sized companies for about 20 percent and large companies for 40 percent. Companies with 50 or fewer employees are significantly more frequent in the service industries than in other industries.
The largest Swedish companies 2015
|Sales (SEK million)
|Telefonaktiebolaget LM Ericsson
|H&M Hennes & Mauritz AB
|Volvo Car Group
|Svenska Cellulose Aktiebolag SCA
|Atlas Copco AB
|ICA Gruppen AB
|Nordea Bank AB
|Telia Company AB
|Preem Petroleum AB
Abbreviated as SWE by abbreviationfinder.org, Sweden is Europe’s second most prosperous country, after the Russian Federation. Two thirds of the land area is covered by forest. Nearly a fifth of this, however, is unproductive, such as mountainous forests and areas that are not productive for technical and economic reasons. There are also forest areas that are productive but are not used for regular forestry. This includes mainly nature-protected areas, but also especially forested pastures, military exercise areas and urban recreation areas. In total, a quarter of all forest land is exempt from forestry.
In Sweden, the forest industry (forestry, transport of forest products and the forest industry) plays a more important role for business than in any other country in Europe, apart from Finland. In 2018, it accounted for 10 percent of Sweden’s goods export value. In addition, the forest has a growing importance for the supply of renewable energy.
In all counties, the coniferous forest dominates, but the proportion of deciduous forest has increased over the last thirty years. More than four fifths of the coniferous forest consists of more than 3.5 billion forest cubic meters (m³). Fir trees are found all over the country, pine forests especially in northern Norrland. The most prominent forest counties are Gävleborg and Västernorrland counties, with land for forestry of 81 and 78 percent of the land area, respectively. Skåne counties have at least 35 percent of forest land.
Since the 1920s, the volume of wood in Sweden’s forests has almost doubled. The supply of spruce increased during the 20th century until the 1970s. Subsequently, mainly deciduous trees have increased, but also the supply of pine, while spruce is now increasing slowly.
The conditions for forest production are most favorable in southern Sweden, where both wood supply and growth per hectare are greater than in the north. Over the past hundred years, forests in mainly southern Sweden have also greatly improved, in terms of both quality and storage. The most important reason for the growth is that modern forestry is effective and long-term sustainable.
In recent years, annual harvesting has been at 85–90 million m³, while annual growth has reached 110–130 million m³, which means an increase in the timber supply by approximately 30 million m³. The devastating storms Gudrun (2005) and Per (2007) in southern Sweden meant both increased departure and reduced growth.
Most of the harvested timber goes to sawmills or the pulp industry. Nearly a tenth of the timber is used as firewood.
50 percent of the forest area is owned by private individuals and households. In southern Sweden, it is most common with privately owned forest land, while state-owned forests are mainly found in northern Norrland and corporate forests in southern Norrland. Nearly a quarter of the individual owners run forestry together with agriculture. It is therefore somewhat problematic to assess the importance of forestry to the country’s employment. In 2017, forestry, including management and service to forestry companies, was estimated to have approximately 17,500 employees.
Forestry requires a white branched transport network. Since 1991, no logging fleet has taken place in Sweden, and most of the timber transport takes place by truck. The importance of the railways has increased since the turn of the century and they account for just over two-fifths of the timber transport.
Fishing now plays a very small role for Sweden’s GDP; Among the EU’s fishing nations, Sweden comes first in about tenth place. However, fish and fish products have a relatively high importance in our foreign trade in food.
Fishing was previously an important binary in many coastal communities, but has now almost completely disappeared. By contrast, recreational fishing is estimated to involve more than 1 million people in Sweden, and fishing tourism is gaining importance in maintaining a vibrant countryside.
The catches were greatest in 1995 and 1998, when approximately 400,000 tonnes were landed. Then came a decline that became particularly strong after 2006.
Sweden’s membership in the EU means that Swedish fishing is heavily regulated (see fishing), and Swedish fishing in the Baltic and the North Sea is governed by the quotas allocated annually to each member country. At the beginning of the 2010s, almost half as much fish landed as in 2006, but in terms of catch value, the decline was slight, as the value of seafood generally increased. However, some species, such as cod, have had a large decline in value.
In 2013, seafood accounted for slightly more than SEK 29 billion in import costs and SEK 23.5 billion in export income. Nearly three-quarters of all imported fish were moved to another country. The main explanation for this is that after entry into the EU, Sweden has become a transit country on the Norwegian fish (mainly salmon) route to the rest of the EU.
Catching methods, catches and catch areas
Nearly half of the total value of Swedish fishing comes from sea fishing for fish that live in large shoals (so-called pelagic fishing). Primarily, herring/herring and pungent herring are caught, but also sibling fish and mackerel. Such fishing is carried out by the largest fishing vessels that use string paddles or floating trawls. This occurs mainly in the Baltic Sea but also in the Kattegatt, Skagerrak and the North Sea. The largest fishing boats belong almost exclusively to Bohuslän, the Gothenburg area and northern Halland.
The fishery for seafood (North Sea shrimp, sea lobster) and bottom-living fish, mainly cod, is almost as important as flatfish. Shrimp fishing involves bottom trawling, usually with smaller boats fishing off the north west coast. The same is true for most of the cancer fishing, but cancer trapping with cages (pewter) is also a much more environmentally friendly method. The home ports of shellfish are found in Bohuslän and the Gothenburg area.
Cod is now fished almost exclusively in the Baltic Sea, mainly through bottom trawling and with large vessels. Bottom trawling and eutrophication have drastically deteriorated the living conditions of the cod and the fishermen are now fewer, smaller and more often injured. For a long time in the Öresund, trawl fishing bans have prevailed and there is a viable cod stock. Swedish cod fishing is carried out partly by a few very large vessels from the west coast, and partly by smaller fishing boats with home ports, mainly in Skåne and Blekinge.
Lake fishing accounts for less than 1 percent of the total catch in the country in terms of weight. However, there are valuable species such as geese, cyclamen, freshwater crayfish and eel, and these make up 6 percent of the total catch value.
Aquaculture (cultivation of animals and plants in fresh water and along coasts) has very little international scope in Sweden. These are mainly rainbows, mainly in streams in the inland of Norrland, and crayfish on the west coast.
Professional fishery change
Fishing has undergone a major structural change. Commercial fishermen decreased from 16,000 in the mid-1900s to 4,000 around 2000 and 1,200 at the end of the 2010s. The number of fishing boats has been reduced at the same rate, and the fishing ports have been increasingly concentrated to the west coast. The fishing boats have gradually become larger and require deeper ports, and old fishing ports are gradually becoming too small. The large vessels that fish in deep water, even in the Baltic Sea, can only enter a few ports.
Fishing as a profession remains mainly in the Gothenburg archipelago. More than half of Sweden’s professional fishermen belong in fishing villages along the west coast. Fiskebäck in western Gothenburg is the home port for the largest tonnage by far. The second largest fishing port is Träslövsläge in northern Halland. Significant ports are also found on the islands outside Gothenburg, for example Rörö, Fotö and Donsö. The fishing ports on the southern Baltic are smaller but important centers for cod fishing. Mainly mentioned are Simrishamn and Skillinge in southeastern Skåne and Nogersund in Blekinge.
Danish and Norwegian fishermen land catches in ports on the Swedish west coast, and Swedish trawlers usually land 20-40 percent of the annual catch in Danish ports, mainly in Skagen and Grenaa in northern Jutland. Most of it, in terms of weight, is crisp herring and other low value fodder fish, which is prepared into fish meal and fish oil.
Over the last few decades, overfishing has seriously reduced the stocks of herring and cod in the Baltic Sea, the Kattegat and the Skagerrak. For some of these stocks, the development has improved and the fishing quotas have increased for herring and herring in the Bothnian and Central Baltic Sea. However, the situation is still very serious for the cod stock.
A negative consequence of the fishing quotas has been that by-catches are discarded if the allowable quota is already filled. Since 2015, all caught fish must be brought ashore. In addition, there have been demands to use selective gear that does not collect by-catches. The goal of the current EU fisheries policy is for all fish stocks in all EU fishing waters to recover by 2019.
Bioenergy is becoming increasingly important for the energy supply. In 2014, it accounted for just over a third of the total energy supply. The use of wood for heating has an ancient tradition, and Sweden’s extensive forestry is an important reason why bioenergy has a greater role in Sweden than in many other countries. In addition, there has been political support for the use of renewable energy for several decades.
Biofuels are mainly used for energy-intensive processes in the forest industry and for heat production in district heating plants, but also for the production of fuels (ethanol, biodiesel, biogas) and for electricity generation in cogeneration plants.
The use of different types of biofuels has increased for each year and in 2017 amounted to about 20 percent (according to different calculation methods) of all fuels.
Ethanol is obtained by fermentation of mainly wheat and maize, which is mostly imported. The raw material for biodiesel is rapeseed, which is even more heavily imported, mainly from Denmark. Diesel is also obtained from slaughterhouse waste, mostly imported. Biogas is obtained by digestion and provides both heat and electricity as well as fuel. This process mainly uses sludge from municipal sewage treatment plants, but also households’ sorted food waste as well as waste from the food industry and trade.
Peat now has very little significance as an energy raw material. Peat is usually regarded as a renewable raw material, but since no new production takes place in a societal perspective, peat should be regarded as fossil and thus a finite energy raw material. See also bioenergy.
In Sweden, there are ores with different levels of uranium, both in southern Sweden up to Närke and in the foothills of southern Lapland and in Jämtland. Highest is the level in Falbygden with Billingen in Västergötland. Small occurrences are also found in the indigenous mountain in Inner Norrland. For a few years in the late 1960s, uranium was mined in a quarry in Ranstad on southeast Billingen. Nowadays, all the uranium used in the Swedish nuclear power plants is imported from Canada, the Russian Federation, Namibia and Australia.
Nuclear energy in Sweden was expanded in 1972–85 and nuclear energy production was at its greatest during the 1990s, when it accounted for about half the electricity supply. In 2017, the share was 40 percent of electricity generation and 32 percent of total energy supply.
Nuclear power plants were built in the southern part of Sweden, partly because most of the need for electricity is there, and partly because the northern parts of the country were previously supplied with electricity from hydroelectric power stations in Norrland.
Nuclear energy was disputed already during the construction period and various parliamentary decisions have since been made on its future role. After the change of government in 2014, it was emphasized that nuclear energy will be phased out and that Sweden will eventually use 100% renewable energy. Nuclear power plants have been faced with increased safety requirements and thus higher costs. They are getting older and the need is gradually increasing to renew them or replace nuclear energy with other energy. See also nuclear energy.
The industry is one of the three main industries, and as such it also includes mining, which is treated under minerals. This article only deals with the manufacturing industry.
In terms of the proportion of employed, Sweden’s manufacturing industry was most extensive in the 1960s. Subsequently, increased international competition has meant that several Swedish industrial sectors have almost completely disappeared; Both the textile and clothing industry as well as the shipbuilding industry have been outstripped by operations in low-cost countries and emerging economies.
In other industries, the large companies grew even larger. Most large engineering companies also increasingly increased their production abroad through business acquisitions or the establishment of new subsidiaries. Many corporate acquisitions during the 1970s and 1980s also meant that groups that had a large breadth in their operations grew. Especially in the engineering industry, systems were developed by domestic and foreign subcontractors.
After the recession in the early 1990s, the large companies returned to focus on their core business, and they sold peripheral businesses to achieve better profitability. Since then, the cost hunt has continued, partly through the companies outsourcing of operations.
Competition in the world market has intensified as countries in other parts of the world have developed industrially, while the global market for advanced industrial products is steadily growing. Swedish large companies have therefore focused their operations on highly developed products where the companies can be world leaders. Several examples are found in the mechanical industry and instrument manufacturing.
Through its extensive global operations, the country’s 10 largest industrial companies play a significant role in Sweden’s economy.
The globalization of business has meant that many industrial jobs in Sweden are included in groups where business decisions are made abroad. More than a third of the industrial employees in Sweden work at foreign-owned companies. The largest share is in the chemical and pharmaceutical sectors as well as in the transport industry.
As a large part of Swedish industry exports to European countries, the weak economic cycle in Europe 2012-14 resulted in weak or non-existent growth for several Swedish industrial sectors. However, the industry has since recovered.
Globally, Swedish industry has a strong position in terms of mainly telecom equipment and medical technology equipment, special steels, cemented carbide tools, paper products and road vehicles.
The food industry is one of the largest industrial branches and the geographically most widely spread industry in Sweden. It is found in all counties but has the largest scope in the three metropolitan counties, where the market is also the largest.
The industry has a large proportion of small businesses; in the mid-2010s, more than 40 percent were one-man companies. However, a few large companies account for the majority of production, and the two largest account for close to one third of sales.
At the same time, there is a weak trend that increased small-scale operations will enter the market with new products or processes (for example, local microbreweries) or by refining local or less common raw materials.
Exports from the food industry mainly go to neighboring countries, but Swedish products such as vodka and cakes are sold especially worldwide.
Foreign ownership is more common in the food industry than in the industry as a whole. For example, farmer cooperative activities have also been internationalized; The Arla dairy cooperative is now also owned by farmers in three other countries and the producer cooperative Scan AB has been a member of the Finnish food group HKScan since 2007.
Food industry companies
|food industry company with the biggest turnover in 2017
|Lantmännen’s economic association
|AAK Sweden AB
|Arla Foods AB
|KHScan Sweden AB
|Scandi Standard AB
|Orkla Foods Sweden AB
|KLS Ugglarps AB
Large food companies have operations in several stages in the product chain from raw material processing (in slaughterhouses, mills and dairies) to the production of finished foods and also frozen foods. The largest companies have large-scale manufacturing at a few factories.
Traditionally, the food industry has been dominated by farmer-owned companies. Several of them have become prominent in their segments, such as Scan with slaughterhouses and production of meat products and dishes. Lantmännen Economic Association also has operations that span the entire production chain.
In certain segments, such as canned goods and sweets, the brand may be important in competition in the market. For example, through many corporate acquisitions, Orkla Foods has amassed around twenty well-known brands such as Felix (canned), Abba (fish canned) and Önos (jam and juice).
Tourism and gastronomy
In 2017, the tourism industry had a turnover of SEK 317 billion, an increase of just over 7 percent compared to the previous year. The industry’s contribution to GDP was estimated at 2.8 percent. The share has been between 2.7 and 3 percent throughout the 1990s, which indicates that tourism’s share is at a fairly constant level in relation to the country’s overall economy. In 2017, 16.2 foreign overnight stays were made in Sweden. The visitors came mainly from Norway, Germany, Denmark, the UK, the USA and the Netherlands.
Note: the capital city of Sweden is Stockholm with a population of 974,000 (2019). Other major cities include Gothenburg with a population of 579,000, Malmö with a population of 344,000, Uppsala with a population of 231,000 (2019).
Liseberg’s amusement park in Gothenburg is Sweden’s most visited tourist destination, followed by Gröna Lund, Skansen and Vasa Museum in Stockholm. Gothenburg offers visitors a unique cityscape with, among other things. the county governor’s houses and park and garden facilities as well as several museums, e.g. The Röhsska Museum.
In the Kingdom of Glasland in Småland, craft glass is still being manufactured in worthy preserved industrial environments. Many urban environments attract tourists, e.g. Hello for a genuine small town environment, Gävle with preserved neighborhoods with older buildings and Sundsvall with a time-typical city plan. Stockholm is the prime example of an urban environment that has many historical layers of buildings and other environments. Especially the Old Town with its medieval atmosphere attracts tourists. Other attractions include the castle, the town hall, the churches, Skansen and the Globe. The capital houses a number of museums, of which the Vasa Museum attracts the most visitors.
A cultural treasure constitutes Sweden’s approximately 3,000 churches, from the smallest chapel to the cathedral in Uppsala. Thanks to the old parish division, there are also many environments with church villages and church towns preserved. The old cultural environments are often nurtured by hometown associations, which at their hometowns attract visitors to various events. The unique public right, which gives free access to nature under its own responsibility, attracts visitors who want to hike, ski, pick berries and mushrooms, fish, sail etc. Especially valuable nature is protected and protected in national parks and nature reserves.
In 2019, Sweden had 15 items on UNESCO’s World Heritage list (see table).
Sweden is gastronomically characterized by the country’s large climatic differences: the northern parts closest to the culture of catching culture where nature (game, mushroom, berry, fish) and the great distances created traditions essentially separate from the southern parts of the continent and influenced by the peasant landscape. The hinterland and the forest gave other habits than in the coastal belt.
To a great extent, the home cooking remains unharmed in our country, the “innovative” restaurants devote as much to finding back to the original domestic recipes as to finding new, foreign dishes or refining the French or Italian classics. However, in recent decades, the home cooking has been increased by a number of dishes, which give a hint that the food culture in Sweden has in no way stopped but is open to new impulses: pasta, pizza, kebab and Asian food are more common today than cabbages, body cakes and icing ribbon.