Sweden’s cities to grow fastest

Nordea bank predicts that over the next few years the pace of growth in Sweden will be fastest in cities. As a result people will move in greater numbers from the countryside towards city regions.

Nordea’s economists have tried to asses the forms that economic development will take in different parts of the country. This year the three city regions – Stockholm, Gothenburg and Malmö – will grow at a rate of approximately 4.5 per cent.

Growth in the rest of the country is expected to be one percentage point lower than in the cities.

Stockholm and the surrounding Mälardalen region are setting the pace. Previously, growth in the Stockholm region was reliant on the telecoms sector. But the city is now changing tack.

Future growth is likely to emanate from the expanding private service sector, which is considerably larger in Stockholm than in the rest of the country.

Western Sweden, with its automotive industry, and southern Sweden, with its broad industrial base, are growing at more or less the same speed. Growth in the rest of the country, incorporating 40 per cent of the population, is slightly less prodigious.

“We believe that the rest of the country will continue to grow at a satisfactory rate, though slightly more slowly than the city regions,” Nordea’s economist Torbjörn Isaksson told news agency TT.

Job creation in the cities will see growing numbers of people moving into these regions. Mälardalen will experience a reversal of the last few years’ outwards migration.

Moreover, the new government’s budget may affect people’s willingness to change address.

“The government’s ambition to switch from benefits to employment may have a bearing on migration flows. This may affect areas with high unemployment,” said Isaksson.

Nordea predicts continued strong growth for Sweden over the coming years.

The increase in the country’s GDP will reach a peak of 4.1 per cent this year, falling back to 2.5 percent in 2008. Open unemployment will fall from 5.4 to 5.1 per cent over the same period.