The Swedish economy was less affected by the covid-19 pandemic than other EU member states. The good result was contributed by the behavior of Sweden, which during the pandemic adhered to the strategy of minimal introduction of restrictions and mostly adopted only practical measures in response to the spread of the disease. Sweden did not proceed with partially greater restrictions with impacts on economic activities until after the approval of the temporary pandemic law at the beginning of 2021.
But for the export-oriented Swedish economy with strong ties to international trade, the effects of the pandemic were inevitable. The disruption of supply chains and the overall dampening of global trade contributed most to the collapse of the Swedish economy.
Although the country experienced a significant economic downturn by its standards due to the pandemic, the three percent drop in GDP in 2020 was one of the best results in Europe. The Swedish economy is expected to return to pre-crisis growth in 2022.
The government’s annual expenditure to support the economy in the fight against the covid-19 pandemic reached a value of USD 46 billion, which corresponds to approximately 8% of GDP. The biggest support went to programs to save jobs, direct aid to affected businesses, subsidies to municipalities, postponement of tax payments, expansion of sickness benefits and strengthening of insurance in case of job loss.
This support was provided through many government economic packages. In addition, as part of the monetary measures, the Central Bank of Sweden (Riksbank) released funds amounting to approximately 16% of the country’s GDP to strengthen liquidity and bond purchases. Further support will be expanded and supplemented in 2021 as well.
The budget for 2021 includes historically high measures and reforms in the field of fiscal policy in the amount of approximately USD 1 billion for now. Given that Sweden entered the crisis with very healthy public finances, the country will have no problem financing the support measures. Sweden’s debt should rise to around 40% of GDP, which is still one of the best values within the EU.
Post-COVID-19 opportunities for foreign exporters
Sweden occupies an international position as a leader in environmental policy. Sweden’s goal is to become the first carbon-neutral country in the world by 2045. In the energy sector, the goal is to achieve 100% of electricity production from renewable sources by 2040. The current approx. 55% share of electricity production from renewable sources will therefore continue to increase in the coming years.
In the field of traditional renewable sources, the wind energy sector is developing most dynamically in Sweden, which is supported by new technologies and reductions in production costs. Production of electricity from wind sources should increase approximately threefold to 90 TWh by 2040 and should account for approximately 40% of electricity consumption. The solar energy market is limited in Sweden, but it is starting to develop gradually mainly due to government funding and investment support offered.
Opportunities for cooperation also exist in the field of modern renewable resources. As part of the hydrogen strategy, a number of large industrial projects using renewable, clean hydrogen are being prepared in Sweden. The Swedish company’s rapid electrification is driving demand for sustainably produced batteries.
The efficient and sustainable use of biomass energy is another important part of Sweden’s fossil fuel replacement policy. At the same time, opportunities exist in the area of modernizing transmission networks and increasing the energy efficiency of buildings, for which the Swedish government has allocated separate government resources.
According to allcountrylist, the construction industry is a priority of the Swedish government and belongs to the most promising sectors for possible cooperation. This applies to both residential and industrial buildings as well as infrastructure projects. The Swedish national transport plan for the period 2018-2029 includes approx. EUR 70 billion of financed infrastructure projects. Most of the funds will be spent on railways, roads and other major projects.
In the case of the railway, it will be the largest investment in modern history. One of the projects is to build a high-speed railway connecting the three largest Swedish cities Stockholm, Gothenburg and Malmö, where Sweden plans to invest EUR 25 billion. The money will also go, for example, to projects for the construction of new lines of the Stockholm metro, a railway tunnel in Gothenburg or the modernization of a bridge in the Baltic Sea.
One of Sweden’s problems is the lack of residential housing. More than 80% of Swedish municipalities face a housing shortage. The government therefore plans to invest over EUR 150 billion in new residential construction by 2025, and 700,000 new apartments and offices should be built by 2030.
Swedish construction companies are unable to cover the huge construction demand on their own. Opportunities for Czech companies exist in the field of supply of large transport structures, bridges, tunnels, projects for industry and civil buildings, for public and private investors. Chances also exist in the field of innovation and development of new materials with the aim of applying sustainable and ecological construction technologies.
The engineering industry is the backbone of the Swedish economy. The export of engineering products represents approximately 33% of total Swedish exports. The Swedish engineering industry includes both major renowned global corporations and a large number of other firms of all sizes that develop technologically advanced products and services.
The Swedish engineering industry has traditionally taken a leading role in the use of new technologies and in the implementation of new business models. A third of research spending in Sweden comes from engineering firms. As a global leader in innovation and digitization, Sweden is an ideal place to create highly competitive smart industrial solutions.
Approximately two-thirds of all employees (i.e. approx. 600,000) of Swedish engineering companies are employees working outside Sweden – due to their global scope, Swedish engineering companies are sought-after partners for cooperation.
The covid-19 pandemic and the associated economic crisis have shown the limits of global supply chains and the vulnerability of ensuring stable sub-supplies for the Swedish engineering industry. Sweden currently imports both light and heavy engineering products.
The largest volumes of imports relate to motor vehicle parts and accessories (annually worth over 6 billion USD), data processing machines (billion USD), parts for office machines (billion USD), devices used in medicine (1 billion USD) or pumps and compressors (1 billion USD).
Entertainment and leisure
In the entertainment and leisure sector, the gaming industry dominates the opportunities. Today, Swedish video games reach more than a billion players worldwide, and Sweden is one of the main centers of the European gaming industry. The industry is a pioneer of new technologies and has proven to advance innovation potential in areas such as augmented reality, artificial intelligence and defense.
The development of the gaming industry in Sweden is supported by a functioning system of government support and a very efficient startup ecosystem. The covid-19 pandemic had a rather positive impact on the approximately 30% growth of the gaming industry.
Czech companies are offered a number of opportunities for direct cooperation or to acquire unique know-how. One possibility is cooperation in the form of investments and acquisitions, as a large number of investors from literally all over the world are concentrated on the Swedish market.
Another option is the workforce area. These are not only positions related to development, but also to the fields of creative arts, business and marketing. Currently, about a third (i.e. about 3,000) of Swedish workers in the industry are from countries outside Sweden. A number of specialized fairs and conferences also encourage cooperation. Events such as the “Nordic Game” or the “Sweden Game Conference” directly target the creation of business opportunities through so-called matchmaking platforms.
Last but not least, opportunities are also emerging in sectors linked to the gaming industry, i.e. cloud services, streaming platforms or very popular e-sports, in which Sweden is often at the forefront of world events.