Which areas in Sweden have the best economic prospects?
As Sweden sinks deeper and deeper into the economic downturn, only Norrland and its booming green industry sector is expected to see its economy grow next year.
Acccording to the latest regional forecast from the Nordea bank, the economies of Upper Norrland (Västerbotten and Norrbotten), and Central Norrland, (Jämtland and Västernorrland), will grow by 1 percent and 0.5 percent respectively next year, compared to a fall of 1.3 percent for Sweden's economy as a whole.
At 3.7 percent, the unemployment rate in Västerbotten, home of the Northvolt battery plant and several big wind power developments, is the lowest in Sweden.
The economy of Småland, Öland and Gotland will stand still, and the economies of Western Sweden, Southern Sweden, Stockholm, Eastern Central Sweden and Northern Central Sweden, will fall by 0.5 percent, 0.3 percent, 0.2 percent, 0.3 percent, and 0.1 percent respectively.
"The differences are unusually big and will grow further in the coming year," said Susanne Spector, the bank's chief analyst and author of the report.
"Things are looking best in the north: they've had a short dip but now things are pointing upwards again," she said.
This year, the economy of Upper Norrland is expected to hold steady at 0.0 percent, which is still better than the other regions which are all expected to have negative growth.
Below we break down the outlook for each region.
Upper Norrland
Nordea's report calls Upper Norrland, which includes Västerbotten and Norrbotten, "best in the class", explaining that "big industrial investments" are keeping growth high despite a global economic slowdown.
According to the report, the region's manufacturers had reported a fall in orders in the spring, but that this had already bounced back with the National Institute of Economic Research's industrial barometer back above average, with signs that the service sector is also increasing hiring.
The region is expected to see its economy grow by 3 percent between 2022 and 2025, the highest rate in Sweden. The only industry struggling is the building industry, which has seen the rate at which new building projects are started fall by nearly 60 percent in response to rising interest rates.
Central Norrland
According to the report, the economy in Central Norrland, which includes Jämtland and Västernorrland, is "stable", with the pace of green industrial development in the north of Sweden having knock-on effects in the region.
The region is also benefiting by increasing orders for its defence manufacturers as a result of the war in Ukraine.
Central Norrland is expected to see its economy grow by 0.5 percent on average between 2023 and 2025, and the unemployment rate has fallen below that of Western Sweden, to rank second lowest behind Upper Norrland.
The big challenge for the region is the declining population, which is leading to a labour shortage which acts as a break on development. The region was the only one in Sweden to see its population fall in 2022.
Stockholm
Stockholm's economy is the most interest rate sensitive, due to the high prices of houses and apartments in recent years. The construction sector is particularly hard hit, with the rate at which new building projects are started falling by 70 percent.
According to Nordea, the city's powerful service industries are compensating for this, leaving expected growth in 2024 falling just 0.2 percent, while employment will rise 1.6 percent, only slightly behind central Norrland.
Despite this, the unemployment rate in Stockholm is rising higher than average in Sweden, due to the high growth rate of its population.
Western Sweden
Western Sweden (Västra Götaland and Halland) is heavily depending on the car manufacturing industry, which means it often follows a slightly different business cycle to the rest of Sweden.
Last year production in the local car industry fell by 4 percent. Vehicle production has bounced back to 20 percent this year, but according to Nordea, this is primarily to fulfil delayed orders, with the number of new orders in decline.
"The strong development in the car industry so far this year means that Western Sweden is showing strong resilience in 2023, while the bleak outlook means it is expected to see the worst economic fall next year," the report reads.
Employment grew by 1.3 percent in the second three months of 2023, but is expected to fall off sharply next year with layoffs increasing and new hiring grinding to a near halt.
Southern Sweden
The economy in Southern Sweden (Skåne and Blekinge) has been hit particularly hard by the high electricity prices in 2022, and there is little sign that the weak krona has drawn over enough border shoppers and tourists from Denmark to prop up the economies.
According to Nordea's report, shops in Southern Sweden are more concerned about excess stock than their counterparts in other regions, and the region's service sector is pessimistic about growth in the near future.
The rate at which new construction projects are starting has fallen by 74 percent, with many in the building industry being laid off.
In August, Skåne once again registered the highest unemployment rate in Sweden. Growth in Southern Sweden is expected to fall by an average of 2 percent in 2023.
Småland and the islands
Småland was also hit by high electricity prices in 2022 and the start of 2023, high interest rates have also had an impact, and the local furniture industry, dominated by Ikea in Älmhult, has seen a 15 percent drop this year.
But according to Nordea, the region's retailers say stocks levels are normal, suggesting they are less hard hit than in other regions, while employment rose by 0.7 percent in the second quarter of 2023 and the unemployment rate remains at a low level.
Eastern Central Sweden (Uppsala, Västmanland, Södermanland, Örebro, Östergotland)
Eastern Central Sweden, as usual, is following a similar trajectory as Sweden as a whole, with an 80 percent fall in new build starts, and a fall in new jobs being offered this year, after several years when the region saw one of the highest rates of new job offers in Sweden.
The region is expected to see its economy fall by 1.5 percent in 2023 and by 1.3 percent in 2024.
Northern Central Sweden (Gävleborg, Dalarna, Värmland)
This region has been hit by a 10 percent slump in the paper and pulp industry this year, with the National Institute of Economic Research's regional industrial barometer pointing to the region as the one where the manufacturing industry is seeing the biggest struggles.
The retail industry is also being dragged down, with local shops finding it harder to shift stocks than those of any other region.
The employment and unemployment rate has so far show resilience, but Nordea expects this to change with employment falling in the near future.
Nordea expects the region's economy to fall by 1.8 percent this year and 0.1 percent in 2024.
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Acccording to the latest regional forecast from the Nordea bank, the economies of Upper Norrland (Västerbotten and Norrbotten), and Central Norrland, (Jämtland and Västernorrland), will grow by 1 percent and 0.5 percent respectively next year, compared to a fall of 1.3 percent for Sweden's economy as a whole.
At 3.7 percent, the unemployment rate in Västerbotten, home of the Northvolt battery plant and several big wind power developments, is the lowest in Sweden.
The economy of Småland, Öland and Gotland will stand still, and the economies of Western Sweden, Southern Sweden, Stockholm, Eastern Central Sweden and Northern Central Sweden, will fall by 0.5 percent, 0.3 percent, 0.2 percent, 0.3 percent, and 0.1 percent respectively.
"The differences are unusually big and will grow further in the coming year," said Susanne Spector, the bank's chief analyst and author of the report.
"Things are looking best in the north: they've had a short dip but now things are pointing upwards again," she said.
This year, the economy of Upper Norrland is expected to hold steady at 0.0 percent, which is still better than the other regions which are all expected to have negative growth.
Below we break down the outlook for each region.
Upper Norrland
Nordea's report calls Upper Norrland, which includes Västerbotten and Norrbotten, "best in the class", explaining that "big industrial investments" are keeping growth high despite a global economic slowdown.
According to the report, the region's manufacturers had reported a fall in orders in the spring, but that this had already bounced back with the National Institute of Economic Research's industrial barometer back above average, with signs that the service sector is also increasing hiring.
The region is expected to see its economy grow by 3 percent between 2022 and 2025, the highest rate in Sweden. The only industry struggling is the building industry, which has seen the rate at which new building projects are started fall by nearly 60 percent in response to rising interest rates.
Central Norrland
According to the report, the economy in Central Norrland, which includes Jämtland and Västernorrland, is "stable", with the pace of green industrial development in the north of Sweden having knock-on effects in the region.
The region is also benefiting by increasing orders for its defence manufacturers as a result of the war in Ukraine.
Central Norrland is expected to see its economy grow by 0.5 percent on average between 2023 and 2025, and the unemployment rate has fallen below that of Western Sweden, to rank second lowest behind Upper Norrland.
The big challenge for the region is the declining population, which is leading to a labour shortage which acts as a break on development. The region was the only one in Sweden to see its population fall in 2022.
Stockholm
Stockholm's economy is the most interest rate sensitive, due to the high prices of houses and apartments in recent years. The construction sector is particularly hard hit, with the rate at which new building projects are started falling by 70 percent.
According to Nordea, the city's powerful service industries are compensating for this, leaving expected growth in 2024 falling just 0.2 percent, while employment will rise 1.6 percent, only slightly behind central Norrland.
Despite this, the unemployment rate in Stockholm is rising higher than average in Sweden, due to the high growth rate of its population.
Western Sweden
Western Sweden (Västra Götaland and Halland) is heavily depending on the car manufacturing industry, which means it often follows a slightly different business cycle to the rest of Sweden.
Last year production in the local car industry fell by 4 percent. Vehicle production has bounced back to 20 percent this year, but according to Nordea, this is primarily to fulfil delayed orders, with the number of new orders in decline.
"The strong development in the car industry so far this year means that Western Sweden is showing strong resilience in 2023, while the bleak outlook means it is expected to see the worst economic fall next year," the report reads.
Employment grew by 1.3 percent in the second three months of 2023, but is expected to fall off sharply next year with layoffs increasing and new hiring grinding to a near halt.
Southern Sweden
The economy in Southern Sweden (Skåne and Blekinge) has been hit particularly hard by the high electricity prices in 2022, and there is little sign that the weak krona has drawn over enough border shoppers and tourists from Denmark to prop up the economies.
According to Nordea's report, shops in Southern Sweden are more concerned about excess stock than their counterparts in other regions, and the region's service sector is pessimistic about growth in the near future.
The rate at which new construction projects are starting has fallen by 74 percent, with many in the building industry being laid off.
In August, Skåne once again registered the highest unemployment rate in Sweden. Growth in Southern Sweden is expected to fall by an average of 2 percent in 2023.
Småland and the islands
Småland was also hit by high electricity prices in 2022 and the start of 2023, high interest rates have also had an impact, and the local furniture industry, dominated by Ikea in Älmhult, has seen a 15 percent drop this year.
But according to Nordea, the region's retailers say stocks levels are normal, suggesting they are less hard hit than in other regions, while employment rose by 0.7 percent in the second quarter of 2023 and the unemployment rate remains at a low level.
Eastern Central Sweden (Uppsala, Västmanland, Södermanland, Örebro, Östergotland)
Eastern Central Sweden, as usual, is following a similar trajectory as Sweden as a whole, with an 80 percent fall in new build starts, and a fall in new jobs being offered this year, after several years when the region saw one of the highest rates of new job offers in Sweden.
The region is expected to see its economy fall by 1.5 percent in 2023 and by 1.3 percent in 2024.
Northern Central Sweden (Gävleborg, Dalarna, Värmland)
This region has been hit by a 10 percent slump in the paper and pulp industry this year, with the National Institute of Economic Research's regional industrial barometer pointing to the region as the one where the manufacturing industry is seeing the biggest struggles.
The retail industry is also being dragged down, with local shops finding it harder to shift stocks than those of any other region.
The employment and unemployment rate has so far show resilience, but Nordea expects this to change with employment falling in the near future.
Nordea expects the region's economy to fall by 1.8 percent this year and 0.1 percent in 2024.
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