ECONOMY
Sweden is a highly industrialized country. Agriculture, once accounting for nearly all of Sweden's economy, now employs less than 2% of the labor force. Extensive forests, rich iron ore deposits, and hydroelectric power are the natural resources which, through the application of technology and efficient organization, have enabled Sweden to become a leading producing and exporting nation.
The Swedish economic picture has brightened significantly since the severe
recession in the early 1990s. Growth has been strong in recent years, with an
annual average GDP growth rate of 2.5% for the period 2000-2004 and 2.7% in
2005. The inflation rate was low in 2006, with an annual average inflation rate
of about 1.5%, but unemployment remains a stubborn problem. The inflation rate
rose to 3.5% in December 2007. The unemployment rate held steady in recent years
at about 5% and in 2005 reached 7.8%. Unemployment in 2007 reached 5.2%. Since
the mid-1990s, Sweden's export sector has grown significantly as the information
technology (IT) industry, telecommunications, and services have overtaken
traditional industries such as steel, paper, and pulp. The overall
current-account surplus has traditionally been much smaller than the merchandise
trade balance, as Sweden has generally run a deficit on trade in services, net
income flows, and unrequited transfers. However, since 2003 this has not been
the case, as the services balance swung into surplus in 2003 and improved
further in 2004 and 2005. In addition, the income account also swung from
deficit into surplus in 2003, before slipping back to register small deficits in
2004 and 2005. Although the transfers balance remained in deficit, mainly as a
result of Sweden's contributions to the EU budget, the overall current-account
surplus was larger than the trade surplus in 2003-05. Most categories of
services exports produced an improvement over this period, but the biggest
contribution came from business services exports, followed by transportation and
royalties and license fees.
During 2005 real GDP rose by 2.5%, 3.4% in 2006, and 2.9% (est.) in 2007. The
government budget improved dramatically from a record deficit of more than 12%
of GDP in 1993 to a surplus of 0.9% of GDP in 2006. The new, strict budget
process with spending ceilings set by parliament, and a constitutional change to
an independent Central Bank, have greatly improved policy credibility. This can
be seen in the long-term interest rate margin versus the Euro, which is
negligible. From the perspective of longer-term fiscal sustainability, the
long-awaited reform of old-age pensions entered into force in 1999. This entails
a far more robust system vis-à-vis adverse demographic and economic trends, which should keep the ratio of total pension disbursements to the aggregate wage bill close to 20% in the decades ahead. Taken together, both fiscal consolidation and pension reform have brought public finances back on a sustainable footing. Gross public debt, which jumped from 43% of GDP in 1990 to 78% in 1994, stabilized around the middle of the 1990s and has been decreasing in recent years. In 2007 public debt was about 35.6% of GDP. These figures show excellent improvement of the Swedish economy since the crisis of the early 1990s.
Eighty percent of the Swedish labor force is unionized. For most unions there is
a counterpart employers' organization for businesses. The unions and employer
organizations are independent of both the government and political parties,
although the largest federation of unions, the National Swedish Confederation of
Trade Unions (LO), always has maintained close links to the largest political
party, the Social Democrats. There is no fixed minimum wage by legislation.
Instead, wages are set by collective bargaining.
U.S. direct investment in Sweden in 2006 (January-September) was approximately
$2.16 billion. There were major investments in computer software and hardware,
IT/telecommunications, industrial goods, and health care.
GDP (2007, purchasing power parity): $308.9 billion. GDP (2007, official exchange rate): $384.1 billion.
Annual growth rate (3rd quarter 2007): 2.5%.
Per capita income (2006, purchasing power parity): $33,897.
Inflation rate (December 2007): 2.2%.
Natural resources: Forests, hydroelectric power, iron ore, copper, lead, zinc, gold, silver, tungsten, uranium, arsenic, feldspar, timber.
Agriculture (2006, 2.2% of GDP): Products--dairy products, meat, grains (barley, wheat), sugar beets, potatoes, wood. Arable land--6 million acres.
Industry (2006, 38% of GDP): Types--machinery/metal products (iron and steel), electrical equipment, aircraft, paper products, precision equipment (bearings, radio and telephone parts, armaments), wood pulp and paper products, processed foods.
Services (2006, 59.8% of GDP): Types--telecommunications, computer equipment, biotech.
Trade: Exports (2006)--$148.8 billion. Types--machinery, transport equipment, motor vehicles, wood products, paper, pulp, chemicals, iron and steel products, and manufactured goods. Major trading partners, exports (2007)--Germany 9.9%, U.S. 9.3%, Norway 9.1%, U.K. 7.2%, EU total 59.7%. Imports (2006)--$127.3 billion. Types--machinery, petroleum and petroleum products, chemicals, motor vehicles, iron and steel, foodstuffs, clothing. Major trading partners, imports (2007)--Germany 18.6%, Denmark 8.9%, Norway 8.5%, U.K. 6.9%, Netherlands 6.1%, Finland 6.0%, France 4.9%.
