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 will remain a growth outperformer among developed states, with domestic demand remaining strong in 2016-17.
The surge in migrant inflows in 2015-16 will lead to higher economic growth over the medium term, but will present challenges to the fiscal accounts, the labour market, and domestic political stability.
Interest rates will remain low through 2017 as the central bank (Riksbank) will maintain a negative policy rate and disinflationary conditions will persist. However, there is an increasing chance of a policy reversal in 2016, as extraordinarily easy monetary measures are inappropriate given strong economic growth and rising private sector debt.
Major Forecast Changes
Due in large part to the surge in immigration, we have raised...
Sweden Industry Coverage (13)
New vehicle sales rose strongly in Sweden in 2015, against a positive economic backdrop.
We forecast another good year of sales growth in 2016, with commercial vehicle growth set to outperform passenger cars.
The Swedish autos production sector is driven primarily by passenger car output from Volvo Car Corporation at its Torslanda production plant near Gothenburg. Volvo's global sales are buoyant, so there is room for Volvo, and by extension overall Swedish auto output, to continue to grow steadily over the forecast period to 2019.
Commercial vehicle production in Sweden is primarily focused on the heavy truck segment. Volvo Trucks is the dominant player, and the company's output is mostly for export to Europe.
Sweden Commercial Banking
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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 has a bright outlook for a developed market due to a supportive economic environment and advanced composition of the enterprise segment. We believe this will drive growth in spending on new technologies such as advanced cloud computing services, and software and services required for the Internet of Things. 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, but this trend would be concentrated in the latter years of our forecast. Meanwhile, despite maturity, we consider there to be opportunities in the retail market where strong private consumption growth has the potential to trigger premium device upgrades over the medium term....
BMI View: We have significantly increased our forecasts for Sweden's construction industry, after official statistics reported 10.6% sector growth in 9M15. A booming housing market, a strong major project pipeline, especially in the rail transport, and committed government spending make Sweden an attractive investment destination. A further is expected from the surge in immigration and the pressure this will put on housing demand and how this will affect an already overheating housing market.
Latest Updates And Structural Trends
As immigration soars in Sweden, 300,000-500,000 more homes may be needed by 2020, providing a significant boon to the already healthy residential construction sector.
The transport network is the focus of investment under the 2014-2025 national infrastructure plan, with USD76bn...
BMI View: As one of Europe's most developed insurance sectors, Sweden's life and non-life segments are expected to expand at low to medium single-digit rates over the coming years. This growth will primarily result from Sweden's strong economy where expanding private disposable income will push the uptake of policies across a number of sub-segments, including property, motor and non-essential life insurance. While these economic effects will materialise particularly within life insurance, growth in the non-life segment will remain limited due to the country's well-established healthcare system which has rendered health insurance largely redundant.
Sweden Medical Devices
BMI Industry View: The medical device market is expected to experience moderate growth in local currency terms over the 2014-2019 period, although growth in US dollar terms will be constrained by a depreciation of the Swedish krona against the US dollar, which will result in a downturn in 2015 before the market returns to growth from 2016. While 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 reliant on imports.
Headline Industry Forecasts
We forecast the medical device market will grow at a CAGR of 2.7% in US dollar terms over the next five years, rising from USD2.5bn in 2014 to USD2.9bn in 2019. The low dollar growth rate reflects the falling value of the Swedish krona...
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: We continue to view Sweden as a moderately attractive regional market. The proportion of the country's pensionable population is on the rise and coupled with high per capita spending, multinational pharmaceutical companies will continue to be provided with steady revenue-earning opportunities. Such demographic trends will remain the primary driver of growth behind the prescription drug markets though we highlight that the government is likely to put further emphasis on promoting cost-reduction initiatives that would be supportive of the generic medicines market, which would see the market share of patented...
BMI View: This quarter our fundamental assumptions for Denmark, Finland and Sweden continue to be relevant. Taking into account relatively positive macroeconomic expectations for the Nordic region as well as sector trends, we continue to expect power consumption growth in 2016. Similarly, 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 ...
BMI View: We hold a quite muted view across the Nordics for this quarter - with opaque policy environments emerging in Finland, Denmark and Sweden, as the new governments chart out new courses for their energy policy. As all the countries are aiming to curb costs in their non-hydro renewables sectors segments, we expect growth to slow significantly from the levels of the previous decade.
BMI View: A saturated and mature market means that operators need to put forward new strategies in order to find new revenues streams. The most basic is investment into networks, in order to improve usage and migration to the most advanced technologies, as a way to drive ARPU and profitability per user. The next stage concerns the introduction of connected products, such as connected cars, in order to further leverage these investments and improve customer stickiness. The lack of demand for bundling poses a risk, as we believe these services will be more successful as part of shared data plans. Convincing customers to add several products onto one mobile subscription is an operator's main task.
There were 14.336mn mobile subscribers at the end of Q315, for a penetration rate of 146.6%, indicating the saturation of the...
BMI View: We expect Sweden to receive a decreasing number of tourists in 2016 and into the medium term. This will mainly be a result of a fierce competition from neighbouring countries whose tourism marketing and infrastructure is deemed more adequate than Sweden's. The weak krona, however, will continue to attract a number of non-EU countries, including Asia Pacific countries and arrivals will be on the increase. As the country seeks to improve its infrastructure and sustainability in key tourism regions, we expect that this trend will be reversed by 2019.
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