Our comprehensive assessment of Sweden's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Sweden, as well as the latest industry developments that could impact Sweden's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Sweden before your competitors.
Sweden Country Risk
Sweden's status as an open trade-oriented economy means that its growth prospects will depend heavily upon a continued recovery in the rest of Europe.
The 'December Agreement' signed in December 2015 by the minority coalition government led by the Social Democrats and the main opposition parties will maintain broad political stability until at least 2018.
Interest rates will remain low through 2017 as the central bank (Riksbank) will maintain a negative policy rate and disinflationary conditions will persist.
Major Forecast Changes
The Riksbank has been far more aggressive in easing monetary policy than we had previously envisaged, and we have lowered our end-year rate forecasts to -0.4% for both 2015 and 2016 (...
Sweden Industry Coverage (11)
BMI View: BMI maintains a bullish view on vehicle sales in Sweden, based on a strong rebound from pent-up demand following sustained declines in recent years, and a broad recovery in the economy. The primary driver of this growth is the passenger car segment, which we expect to increase 1.5% in 2015. We also expect to see a strong recovery in the country's commercial vehicle segment, and we forecast a 6.1% over the year.
We expect this strong growth to continue into 2015, and we forecast 2.1% growth in total vehicle sales. The moderation in the rate of increase comes from higher base effects following the surge in sales volumes in 2015.
Food & Drink
Sweden Food & Drink
BMI View: Boasting a consumer base of 25mn with some of the strongest purchasing power in the world and offering a favourable business and regulatory environment, the four Nordic markets potentially hold lots of attractive investment opportunities. That said, we note limited opportunities for growth as the economic and demographic outlook remains relatively grim and the food and drink markets are highly concentrated, thus presenting significant challenges for new entrants.
Food consumption (local currency) growth year-on-year (y-o-y) in 2015: +3.6%; compound annual growth rate (CAGR) 2014-2019: +4.5%
Sweden Information Technology
BMI View: The Swedish IT market benefits from its strong local development of ICT companies, world-leading telecoms infrastructure and highly advanced economy. This evidenced by the performance of companies such as Zenterio, which is planning an IPO in 2015. Strong private consumption is expected to be the key growth driver in Sweden in 2015, with potential upgrade opportunities in this mature market. Meanwhile, we identify data centres, cloud computing and real-time business software and services as medium-term growth trends in Sweden. We also highlight the potential for Sweden to be a leading adopter of labour saving smart automation and assistant technologies as a result of high labour costs and its status as a leading innovator. BMI forecasts compound annual growth rate (CAGR) of 4.1% over 2014-2019 for the sector.
BMI View: Sweden overshot our already generous 2014 construction industry growth forecast of 9.5% by posting 10.1% for the year. We now expect to see lower but still very healthy growth of 6.3% in 2015 as the sector continues to benefit from a robust residential infrastructure market and healthy fixed investment. Throughout the remainder of the forecast period, growth is expected to be more subdued at an average annual rate of 2.6% as Sweden's economic outlook is impacted by weak demand from the eurozone and housing investment cools from its current 'highly-heated...
Sweden's insurance sector is one of the most developed in Europe in terms of product innovation and underwriting and pricing discipline. While some areas of the market are already quite mature, the country's strong consumer-driven economy will support further growth in written premiums over the next few years, though we note that currency market fluctuation will affect USD-denominated growth in the short term.
Following on from 2.4% real growth in 2014, the private consumption outlook remains positive, and we project only a slight moderation in both 2015 and 2016 to 2.3%. The labour market is still relatively loose, with unemployment having improved only modestly in the past year, but the deflationary price environment means that real wages will continue to grow steadily. Real disposable income will rise by around 2.0%-3.0% in 2015 and 2016, even as nominal wage...
Sweden Medical Devices
BMI Industry View: The medical device market is expected to experience moderate growth in local currency terms over the forecast period but growth in US dollar terms will be constrained by a depreciation of the Swedish krona against the US dollar. Although Sweden has a strong medical device manufacturing industry including a number of major international companies, the majority of domestically produced medical devices are exported, leaving the domestic market heavily dependent on imports.
Headline Industry Forecasts
The medical device market in 2013 was estimated at USD2,541.1mn, equal to USD265 per capita, and equivalent to 4.8% of total health expenditure, 0.4% of GDP and 0.7...
BMI View : The recent financial results reported by Sweden's largest steel producer, SSAB , are further evidence of an improving operating environment. After six consecutive quarters of negative results, the company returned to profitability in the first quarter of 2014 and has since shown further improvement in terms of its financial performance. The producer reported sales of SEK13.31bn (USD1.81bn) in Q314, up from SEK8.7bn (USD) in Q313. The firm posted operating profit, excluding items affecting comparability, of SEK510mn (USD69.31mn), operating cash flow of SEK77mn (USD10.46mn) and EBITDA of SEK1.25bn (USD169.86mn) in the reported quarter.
The recovery in SSAB's financial performance chimes with the stabilisation in Sweden's overall steel production volumes following the significant fluctuation...
Pharmaceuticals & Healthcare
Sweden Pharmaceuticals & Healthcare
BMI View: Private healthcare providers are to face an increasingly challenging business environment in Sweden. In October 2014, the newly elected government reached an agreement on initiatives aimed at imposing further restrictions on private companies engaged in publicly funded healthcare, care and educational services - and, as part of that limit, their right to distribute profits. This may result in reduced private investment in the country's healthcare sector and may potentially result in diminished innovation as well as capacity problems. In April 2015, the first regional council ordered its officials to find ways to limit the profits private companies can reap from running publicly-funded health services.
Headline Expenditure Projections
Pharmaceuticals: SEK36.41bn (USD5.31bn) in 2014 to SEK36.62bn (...
BMI View: Our fundamental assumptions for Denmark, Finland and Sweden continue to be relevant. We maintain our long-held view that, while growth expectations in the region are improving, economic woes in the eurozone remain a major risk factor for the consumption and generation outlook of the three Nordic countries, as more regional instability could undermine their economic activity. In terms of sector trends, we note Denmark appears to be losing its energy self-sufficient status...
BMI View: This quarter our projections for non-hydropower renewable energy generation in Denmark, Finland and Sweden remain largely unchanged, as our fundamental assumption for the Nordic markets considered in the report remain unvaried. Key projects in the region continue to progress in line with our expectations, with Denmark's progressive loss of its energy self-sufficient status likely to lead the country to a greater focus on the prompt development of renewables. We also note that Sweden's possible phase-out of nuclear energy could jeopardise the reliability of the system, while pushing the country towards a larger share of renewable generation. Meanwhile, Finland's continuous reliance on hydropower and nuclear energy works against...
BMI View: 4G LTE subscriptions account for nearly 28% of the mobile market in Sweden, one of the highest rates in the world, marking it out as one of the most developed telecoms sectors. The same is also true in the wireline sector where fibre penetration is fuelled by increased demand for faster, higher capacity data services. Despite this level of development, operators in the market are under pressure from strong competitors, with a number of international players driving ARPUs to low levels. The regulator has cut mobile termination rates and is poised for another round of reductions later in 2015. We therefore expect more convergence in the sector, with consolidation between mobile, wireline and media companies.