Growth in Sweden reached a high in 2015, and has slowed since. Continued weak growth in 2017 combined with a fast growing population will result in poor GDP per capita growth, well below the historical average.
“Global risks are are also greater than they have been,” Ms Kashefi points out. “These includes more protectionism, and that many countries are deep in debt. Productivity growth has also slowed significantly. Especially in Sweden.”
The primary growth factors in Sweden are domestic consumption, both private and public. Swedish exports are growing slowly, despite a weak krona. Sweden is struggling with its weak international competitiveness.
We have lost market share – exports grew 8 percentage points less than our total export market over the past decade. High wage hikes in relation to productivity growth in Swedish global exporters is likely one reason for losing export market shares. Currently, Sweden benefits from a weak krona, but is predicted to lose market share once this recovers.
“The labour market is most concerning. Unemployment is levelling out near 7 percent. But the average doesn’t say much about what it looks like in reality. For Swedish born working age people unemployment rates are down to low levels, while large groups are unable to enter the market. Unemployment rates among foreign born averages at 15 percent. Bifurcation in the labour market is widening over time and will continue to do so without structural reforms,” concludes Ms Kashefi.