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 outlook for business investment and exports will improve, but will be restrained alongside a poor recovery in the eurozone economy.
The coalition government led by the Social Democrats that was elected in September 2014 is in a precarious position due to its minority status in parliament. We expect a shift in government policy toward greater state interventionism, including tax hikes and a rise in government spending.
Major Forecast Changes
We have lowered our end-year repo rate forecasts to 0.00% in both 2014 and 2015, and to 0.75% in 2016 (from 0.25%, 0.50%,...
Sweden Industry Coverage (11)
BMI View: BMI maintains a bullish view on vehicle sales in Sweden, based on a strong rebound from low base effects due weak sales in 2013, 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 18% in 2014. We also expect to see a strong recovery in the country's commercial vehicle (CV) segment, and we forecast a 15% over the full year.
We expect this strong growth to continue into 2015, and we forecast 7.1% growth in total vehicle sales. The moderation in the rate of increase comes from higher base effects following the surge in sales volumes in 2014.
BMI expect to see a marked increase in Sweden's vehicle production in 2014. Much of this is driven by strong export growth, primarily...
Food & Drink
Sweden Food & Drink
BMI View: The Nordics consumer outlook remains gloomy, as the countries are expected to feel the negative effects of the slowdown in Russia and the eurozone. In 2015, real GDP growth in each country is not expected to exceed 2.4%. Heavy household debt loads will continue to curb private consumption in Denmark and Norway, while Sweden and Finland will suffer from relatively high and sticky unemployment levels.
Food consumption (local currency) growth in 2015: +3.6%; compound annual growth rate (CAGR) 2014-2019: +4.5%
Sweden Information Technology
BMI View: Sweden is one of the most advanced IT markets globally, with a high penetration of devices among consumers and enterprises (including tablets), as well as high adoption rates for software and services. The high penetration of IT products and solutions, along with high incomes, make Sweden a highly lucrative market on per capita term, but market maturity means growth is forecast to significantly underperform emerging markets in the region over the medium term. Despite this there are many positives including a strong local system of software firms and the...
BMI View: Following substantial growth of 9.5% in Sweden's construction industry value in 2014, we expect to see lower but still healthy growth of 6.3% in 2015 as the sector continues to benefit from a robust residential infrastructure market and a slight increase in government spending. 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.
Key Trends And Developments
The transport network is the focus of investment under the 2014-2025 national infrastructure plan, with USD80bn allocated for transport network improvements, including USD13bn on railways and USD24bn on national roads. It remains to be seen what impact the results of the September 2014...
BMI View: Sweden offers a large and well developed insurance market, with both the life and non-life segments proving stable, well funded and competitive. The country is home to a range of large domestic and multinational insurers, as well as smaller specialised firms - particularly prevalent in the non-life segment. As the market is mature, we expect to see limited single digit growth throughout much of the forecast period to 2018, and insurers are likely to turn to product innovation and operational efficiencies to find scope for improved profits.
Sweden's life insurance market is substantial, and the country continues to boast some of the highest individual savings rates in the world. Insurance savings products are particularly popular, accounting for more than 40% of household savings, and along with a comprehensive (and mandatory) retirement savings system this means that the life segment...
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...
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...
Pharmaceuticals & Healthcare
Sweden Pharmaceuticals & Healthcare
BMI View : Declining government reimbursement for prescription medicines does not bode well for innovative drugmakers selling their products in Sweden, particularly as the government is the primary purchaser 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: SEK36.28bn (USD5.70bn) in 2013 to SEK36.41bn (USD5.36bn) in 2014; +0.38% in local currency terms and -5.9% in US dollar terms....
BMI View: This quarter we have extended our forecast to 2024. This notwithstanding, 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 that Denmark...
BMI View : With our fundamental assumptions for the three Nordic markets covered in this report unvaried, our forecasts for non-hydropower renewable energy generation in the Nordics remain largely unchanged. 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.
We are maintaining our 2014 forecast for non-hydropower renewable energy generation in the Nordics this quarter. This is because key projects in the region continue to progress in line with our expectations. For 2014, we expect non-hydropower renewable...
BMI View: Despite the fact that the growth trend has been reversed on the Swedish mobile market, and the market has displayed two consecutive quarters of positive growth, BMI believes that the market has passed its saturation point and any subscriber growth will come from cannibalising the shares of existing operators. However, growing data usage could help the operators grow their profit margins despite the relatively stagnant subscriber numbers and lower income from traditional voice and other non-data services.
The latest operator data for Q214 show that the mobile market reached 14.4603mn users for a penetration rate of 151.6%.
LTE subscription growth accelerated in 2013, to 1.546mn connections, coinciding with the arrival of a wider range of...