SHARE
COPY LINK
For members

ECONOMY

The Swedish regions heading for a recession

Sweden's booming economy is heading for an economic slowdown, but some regions will be worse affected than others. A new report predicts where in Sweden the downturn will hit first.

The Swedish regions heading for a recession
The Swedish economy is slowing down, but some will be hit harder than others. Photo: Fredrik Sandberg/TT

This article was written for Members of The Local. Read more Membership exclusives here.

“Growth in Sweden is expected to be bleak in autumn 2019, and it cannot be ruled out that we will be seeing negative GDP figures for one or several quarters. Employment is falling and unemployment is rising. Resource utilization will be lower than normal, which (the report defines as) a recession,” warns Nordic banking giant Nordea in a new report on the Swedish regional economy.

The Swedish national economy is expected to grow 1.3 percent between 2019 and 2020, which is a significant slowdown compared to previous years and follows an overall global downturn.

“Brexit and increased geopolitical tensions are putting a wet blanket on global development,” states the report, also singling out the ongoing trade conflict between the US and China as a risk factor.

And there are three areas of Sweden were things are looking especially bleak.

FOR MEMBERS:

The region of Småland and islands Gotland/Öland, northern-mid Sweden (which includes the Gävleborg and Dalarna regions) and northern Sweden are predicted to be hit the hardest in terms of their gross regional product (GRP), the market value of final goods and services produced in the region.

Småland's economy is expected to shrink by -0.2 percent this year, followed by -0.4 percent next year, while northern Sweden is set to see a downturn of -0.3 percent this year and -0.2 percent next year.

Northern-mid Sweden's GRP is expected to fall -0.1 percent this year and -0.2 percent next year.

Northern Sweden – or Norrland as the vast and diverse region is usually referred to in Swedish – is with its major raw materials industry sensitive to global market movements and is often seen as the canary in the coalmine for the rest of the Swedish economy, with national downturns often starting there.

Employment in Norrland has fallen by four percent since mid-2018, notes Nordea.

“Norrland reacts first, which indicates further deterioration during the autumn in the rest of the country. Meanwhile, the domestic economy has been stomping in the same spot for over a year,” said Susanne Spector, senior analyst at Nordea, in a statement presenting the report.

However, investment in Sweden's booming tech sector such as new data centres and the battery factory Northvolt in Skellefteå, which is expected to create hundreds of jobs for the region, creates a small light on the horizon, states the report. Tourism is also boosted by the weak Swedish krona.


The Northvolt battery factor is being built in Skellefteå. Photo: Henrik Montgomery/TT

Businesses in both Norrland and northern-mid Sweden are crying out for more employees, states Nordea, with the lack of skilled workers described as a major obstacle to growth in the latter region.

In Småland, comparatively high unemployment is a concern, with Kronoberg county recording the highest unemployment rate in the whole of Sweden in the second quarter of 2019 at 9.3 percent.

However, Gotland and Jönköping counties had among the lowest unemployment rates in Sweden in the same period. And the construction industry keeps growing with a lot of optimism for the future.

READ ALSO: 10 things Sweden should do to make life better for international talent

The report also highlights eastern-mid Sweden (which includes the Södermanland, Uppsala, Östergötland, Västmanland and Örebro regions) as a region performing comparatively well with falling unemployment. However, it notes that the region traditionally takes longer than the rest of Sweden to react to economic fluctuations, and predicts that it will eventually follow the others' slowdown.

Finally, it is worth noting that the report also predicts that a slight upturn in the economy in 2021 will stabilize the situation both for Sweden as a whole and for the worst-affected regions.

Read the full report (in Swedish) here.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

ENERGY

EXPLAINED: When should I turn on my heating in Sweden this year?

Energy costs in Sweden are set to reach sky-high levels this winter, which will leave many people wondering when they should start heating their homes. Here's what you need to bear in mind.

EXPLAINED: When should I turn on my heating in Sweden this year?

What’s happening?

As a result of supply stoppages for cheap Russian gas affecting energy prices on the European market – particularly in Germany – energy prices in Sweden have been at record levels for months, especially in the two energy price zones in the south of the country.

With winter looming and no sign of things getting cheaper anytime soon, private individuals are starting to cut down on energy usage as much as they can to slash their bills this season.

Does it make a difference what type of accommodation I live in?

The right time to start heating your home depends on several factors including your own personal preference, the weather, whether you live in rented accommodation or own your own property, and on the age and features of the property you live in.

How does the heating system work in Swedish homes?

More than half of all houses and commercial properties in Sweden use district heating or fjärrvärme, with this number rising to around 90 percent for apartment buildings.

This system distributes hot water from heating plants to houses and apartments through underground water pipes, meaning that heating sources are centralised, rather than individual houses or apartments having their own heating source.

In smaller towns and in houses, district heating is less common, and it’s these households who can benefit the most from waiting longer to turn on their heating.

Do I control my heating?

It depends. If you live in a rented apartment or a bostadsrättsforening (co-operative housing association) with district heating, your landlord or the board of your housing foundation will usually decide for you when to turn your heating on.

Unlike other countries, Sweden has no official legal heating season, with heating in bostadsrättsföreningar usually switched on automatically following periods of cold weather, no matter which date they occur on.

This will usually be designed to provide an indoor temperature of around 21 degrees – you can turn your radiators down if you feel this is too warm, but you won’t usually be able to turn them up if you want the temperature to be warmer.

The Public Health Agency recommends temperatures of between 20 and 24 degrees indoors, with temperatures lower than 18 degrees in apartments posing a health risk.

Temperatures lower than 14 are not recommended as they can cause condensation and mould growth on walls and furnishings, which, again, are a health risk, and can cause permanent damage to properties.

Can I save money by waiting to turn my heating on?

Again, it depends. If you’re renting and you pay varmhyra – rent with heating included – then you won’t save money directly, but heating your home wisely could make it less likely for your landlord to raise your rent to cover increased heating costs.

If you pay kallhyra – rent without heating included, then waiting to turn on the heating will save money on your electricity bill.

Similarly, in some housing associations, electricity and heating costs are included in your monthly fee, meaning you pay your share of the heating costs for the entire building ever month. In this case, your energy costs are more affected by how much energy everyone else in your housing association uses than your individual usage.

On the other hand, this doesn’t mean you shouldn’t care about how warm your heating is – if you have your heating on full-blast for the whole winter, your costs will increase as well as the costs of all of your neighbours, and if the entire association’s energy costs increase substantially, the board may decide to raise the monthly fee or avgift for everyone in the building to cover this.

If you pay an individual energy bill based on your own household’s usage, and not on an average of the whole building, it could pay to wait before you switch on your heating.

How else can I save money on heating costs?

Turning your heating down a couple of degrees can make a big difference to your heating costs, but you can also save money on heating and make your property feel warmer by making it more energy effective.

There are a few easy ways to do this, according to the Swedish Energy Agency.

Firstly, make sure your house is well insulated, not just your doors and windows, but also in the loft: a large amount of a building’s heat escapes through the roof. This also applies to the boundaries between well-insulated and poorly-insulated areas.

If you have a cellar or conservatory, for example, which is not heated and not insulated, make sure the door between this room and the rest of the house is well-insulated with no gaps around the doorframe where heat can escape into the colder room. 

In a similar vein, locate any drafts and do what you can to block them, either with draft excluders or by replacing worn-out draft excluder strips on old doors and windows.

You can also benefit from thinking about how you furnish your home – furniture placed in front of radiators mean it is harder for warm air to circulate, and you can keep your house warmer at night by closing your curtains or blinds to keep eat from escaping through your windows.

SHOW COMMENTS