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 Â 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:Â 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.
BMI expect to see a marked increase in Sweden's vehicle production in 2014. Much of this is driven by strong export growth, primarily passenger cars to the resurgent European market. Established manufacturers Volvo and Saab produce the lions' share of vehicles in the country, alongside a handful of high-end, low volume domestic carmakers, such as Koenigsegg, Esther, and Coresto....
Food & Drink
Sweden Food & Drink
BMI View: Â The Nordics consumer outlook remains gloomy as the regional economies are expected to feel the negative effects of the slowdown in the eurozone. In 2014 and 2015 real GDP (year-on-year) growth in each country is not expected to exce ed 2.8 %. Heavy household debt load 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 year-on-year (y-o-y) in 2014: +4.0%; compound annual growth rate (CAGR) 2013-2018: +4.9%
Sweden Information Technology
BMI View: Â W e made a small downward revision to the growth outlook for Sweden's IT market in 2014 in the Q4 update to reflect the weaker economic forecast from our Country Risk team. Even prior to the downgrade, growth was forecast to significantly underperform emerging markets in the region over the medium term , due to market maturity. Despite short-term challenges , the market will remain highly lucrative and there are many positives including a strong local system of software firms and the coverage and capacity of supporting data network infrastructure. 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...
BMI View: Sweden's infrastructure sector reported better than expected growth in 2014, with investments across transport and utilities helping to achieve healthy construction industry value growth of 8.9% . With GDP growth set to reach 2.5%, and a range of projects in the pipeline, we expect to see solid growth of 4.4% in terms of construction industry value in 2015, which will then balance out to just under 3% growth during the remainder of the forecast period.
Key Trends and Developments
The government announced it wanted to invest USD80bn in 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 election will have on national transport spending plans.
New opportunities may...
BMI View: Â Shaped by Sweden ' s comprehensive and well-regarded retirement income system, and by the country ' s status as the largest of the Nordic economies, the insurance sector has enormous strengths. Although they differ in terms of their corporate constitution, product/segment focus, preferred distribution channels and histories, all of the leading non-life and life/pensions companies are leveraging brands to deliver superior outcomes to policy-holders: they are doing so in a sustainable and profitable way. The main challenge, though, is that both segments are mature. Sweden is a classic example of a market where premiums will only develop slowly through the forecast period, but where clients and shareholders/stakeholders will be satisfied.
Sweden's life insurance 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 Â but growth in US dollar terms will be constrained by a depreciation of the Swedish kron a 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 US$2,541.1mn, equal to US$265 per capita, and equivalent to 4.8% of total health...
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.Â
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 : Â 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 Â 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: Â With Â our fundamental assumptions for the three Nordic markets covered in this report unvaried, Â our forecasts for their power sectors remain largely un changed this quarter . Â Overall, we maintain our view that , while growth expectations in the region are improving, economic woes in the eurozone remains a major risk factor for the consumption and generation outlook of the three Nordic countries, as more regional instability...
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...