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ECONOMY

Industry operating at full capacity

Even though industry is operating at full capacity with levels even higher than at the turn of the millennium, manufacturers are hesitating to invest. Many companies are concerned that Sweden’s manufacturing sector might be planning to emigrate.

Recently, however, signs emerged that industrial investment might also be on the way back up in Sweden. Industrial investments in 2004 amounted to 51.7 billion kronor, and could increase to 57.5 billion kronor in 2005. Pulp and paper industry investments could rise by as much as 26% this year.

Pay expectations down

Consumers’ pay expectations have fallen sharply in January and February and many people now expect their own income growth to slow down. “Unusual”, is how Örjan Hultåker, the Skop poll’s analyst, describes the result of the survey carried out between 20 January and 8 February.

Lower earnings forecasts in industry

Signs are emerging of lower earnings growth in industry after the numerous pleasant surprises in the recent wave of year-end reports. Many firms are lowering their forecasts after last year’s record profits.

Sources: Dagens Nyheter, Svenska Dagbladet, Dagens Industri

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ECONOMY

Sweden’s new right-wing govt slashes development aid

Sweden, one of the world's biggest international donors, is planning drastic aid cuts in the coming years, the country's new right-wing government said in its budget bill presented on Tuesday.

Sweden's new right-wing govt slashes development aid

Prime Minister Ulf Kristersson’s government said it planned to reduce the country’s international aid by 7.3 billion kronor ($673 million) in 2023, and by another 2.2 billion kronor in 2024.

That is around a 15-percent reduction from what had been planned by the previous left-wing government and means Sweden will abandon its foreign aid target of 1 percent of gross national income.

International aid for refugees will be capped at a maximum of eight percent of its aid, and will also be reduced.

According to the specialised site Donor Tracker, Sweden was the world’s eighth-biggest international aid donor in terms of absolute value last year, and the third-biggest in proportion to the size of its economy, donating 0.92 percent of its gross national income, behind Luxembourg and Norway.

The new government, which is backed for the first time by the anti-immigration Sweden Democrats, had announced in its government programme last month that it would be cutting foreign aid.

Since 1975, Stockholm has gone further than the UN’s recommendation of donating at least 0.7 percent of its wealth to development aid.

Despite its growth forecast being revised downwards — the economy is expected to shrink by 0.4 percent next year and grow by 2 percent in 2024 — the 2023 budget forecasts a surplus of 0.7 percent of gross domestic product.

It calls for an additional 40 billion kronor in spending, with rising envelopes for crime fighting and the building of new nuclear reactors, as well as a reduction in taxes on petrol and an increase in the defence budget.

The new government is a minority coalition made up of Kristersson’s conservative Moderates, the Christian Democrats and the Liberal party, backed in parliament by their key ally the Sweden Democrats to give them a majority.

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