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OECD lowers Swedish growth forecast, citing skills shortage

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OECD lowers Swedish growth forecast, citing skills shortage
What can Sweden do to secure its future growth? File photo: Vidar Ruud/NTB scanpix/TT
10:46 CET+01:00
The Swedish economy is booming, but needs to focus on inclusiveness and well-being in the labour market and society more generally to secure its future growth, a new OECD report warns.

The survey projected GDP growth of 1.6 percent in 2019, three points below the November forecast, and 1.7 percent the following year.

Although it was positive about the current state of the economy, the OECD warned that Sweden was reliant both on the global economy and on its ability to plug its existing skills shortage. This has left the knowledge-based Swedish economy in need of foreign talent, while people in Sweden are not necessarily being educated in the required fields. 

The OECD wrote: "Further streamlining Sweden's business regulations and administrative procedures could raise productivity. Using the opportunities offered by digitalization would improve services, simplify procedures and shorten licence and permit processing times."

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"Sweden's economic, environmental, income and gender equality, and well-being achievements are remarkable," OECD Secretary-General Angel Gurría said at the presentation of the Economic Survey in Stockholm, adding that GDP had expanded at an average rate of almost three percent over the past five years.

He also praised Sweden's employment rate, "among the three highest employment rates in the OECD, and the highest in the European Union". 

"Today's prosperity is testimony to the benefits of the unique Swedish combination of openness and inclusiveness," said Gurría. "Every effort must be made to ensure that the policy framework is maintained, and translates into decent work, better quality jobs and high levels of well-being for all."

Although income equality remained low compared to the OECD average, Sweden still had higher income inequality than the other Nordic countries.

And Finance Minister Magdalena Andersson highlighted the unequal distribution of capital too, saying: "Between 1995 and 2016, average capital income increased by almost 500 percent. Capital income has also become more unevenly distributed, where a very large proportion goes to a small group of people. Managing it is central to combating income gaps."

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Another area the report highlighted was the need to improve housing. Housing prices have shown signs of stabilizing after a fall over the past few years, but the OECD called for an ease of rental regulations and better use of existing housing stock.

"The market suffers from excessively hard regulations that limit the supply of new housing," wrote the OECD.

The report also highlighted the key role of education, and the OECD has previously called on Sweden to improve integration in its schools after years of declining results and growing inequality in education.

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What's more, the OECD noted that Sweden as an export-orientated economy would do well while the global economy was growing, but that this left it vulnerable to trade conflicts and political instability beyond its borders.

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