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 (12)
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 could offer attractive investment opportunities. That said, there are limited opportunities for growth, as the economic and demographic outlook remains relatively grim. Moreover, the food and drink markets are highly concentrated, presenting significant challenges for new entrants.
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: After strong growth of 11.5% in 2014, we expect to see lower but still healthy growth of 6.8% in 2015, slightly up on the previous quarter's 6.3%, as the sector continues to benefit from a robust residential infrastructure market, healthy fixed investment and a strong transport infrastructure project pipeline. 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 as housing investment...
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% of the world market. The...
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: Declining government reimbursement for prescription medicines and the promotion of lower-value generic medicines does not bode well for innovative drugmakers selling their products in Western Europe, particularly as governments are the primary purchasers of pharmaceuticals. Furthermore, over the long-term, pushing costs onto a population with fewer young people to financially support the elderly will ultimately work to reduce the consumption of higher-value innovative pharmaceuticals.
Headline Expenditure Projections
Pharmaceuticals: SEK36.41bn (USD5.31bn) in 2014 to SEK36.55bn (USD4.23bn) in 2015; +0.39% in local currency terms and -20.2% in US dollar terms.
Healthcare: SEK362.30bn (USD52.80bn) in 2014 to SEK371.47bn (USD43.01bn) in2015; +2.5% in...
BMI View: This quarter we have revised down our wind power forecast for Sweden to take into account policy uncertainty over the country's regulatory framework. This in turn has marginally altered downwards the overall forecasts for the country. That said, 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,...
BMI View: We have revised down our forecasts for non-hydro renewables power in the Nordics this quarter, as Denmark will face problems in integrating additional intermittent wind power to the grid due to its saturated power market and high wind penetration, Swedish energy policy uncertainty mutes investor interest in country's sector and Finland suffers from a relatively weak macroeconomic outlook whilst continuing to aim for a nuclear expansion. We highlight that there are upside risks to our muted growth forecasts in all markets, as better interconnections capacity coupled with a smarter power grid will enable...
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.
BMI View: Although we take a positive outlook on the Swedish tourism sector's potential over the next few years, we believe that opportunities for foreign players (other than airlines) will remain limited, and domestic groups across all spheres of tourism are the best situated to benefit from future growth.
We anticipate a moderate uptick in arrivals over 2015 owing to a variety of factors, this includes the krona weakness which could encourage holiday makers to visit a country predominantly perceived as an expensive holiday destination. Moreover, the growing interest in Sweden as both a winter and summer destination, offering spa and eco tourism options alongside winter sports, city breaks and camping are also contributing to the increasingly positive outlook for the tourism sector.
Over the next few years we expect to see steady growth in the Swedish tourism...