Important for Your Business
Market potential
A Competitive Cost Position
Attractive Corporate Tax climate
Productivity Growth
Trade Balance with the U.S.
Quick Facts

 Sweden: An Overview

In the ever-increasing global market, Sweden hosts one of the most internationally integrated economies in the world. With a focus intechnology-driven commerce, Sweden's sizeable trade and foreign investment are only a few signs of the nation's competitive business.

In addition to a notable business sector, Sweden focuses on the future through a qualified, highly-developed workforce and education system - Swedish schools and universities meet high international standards. Swedish society itself is reflective of the country's widespread innovation in information technology.

This inventive technological pioneering stems from Sweden's high expenditure on and investment in Research & Development (R&D). R&D is an integral part of Sweden's economy, providing for the necessary breakthrough technology so vital to business. Due to this as well as Sweden's commitment to education and Information & Communications Technology (ICT), Sweden is recognized as one of the world's most knowledge-based economies.

Important for Your Business

With its access to new technology and thriving business, Sweden has been crucial for foreign investors seeking opportunities in trade. Sweden also offers a vital location, serving as a gateway to three distinct markets: Scandinavia (25 million consumers), Baltic Sea Region (100 million consumers), and the European Union (350 million consumers). Sweden serves as an ideal spot for conducting high value-added operations in goods or services or for establishing competency centers to serve the entire region.

In addition to location and technology, Sweden attracts numerous foreign investors due to its highly-educated populace and global business mindset. In 2006 alone, Sweden had the most private equity investments as a percentage of GDP in all of Europe (Source: European Venture Capital Association).

     Market potential

Sweden is often seen as a frontrunner in adopting new technologies and setting new consumer trends more broadly. Thus, in Sweden products and services can be tested where there are already demanding customers and high levels of technical sophistication. Nowhere else is average market take-off so rapid, and Sweden's test market for new technologies is ranked third after Iceland and Japan.

In the last reported five-year period of 2000–2004, Sweden was the 15th largest Foreign Direct Investment (FDI) recipient in the world with recorded inflows of $ 65 billion (€ 52 billion). Total FDI assets in Sweden amounted to 52 percent of GDP, which can be compared to an EU average of 32 percent.

Sweden attracts investors from a wide global community. Between 2001 and 2005, priminent investors in Sweden originated from the US, Germany, the Netherlands and the other Nordic countries. Foreign interest is mainly focused on high tech segments in information and communication technologies (ICT), pharmaceuticals, energy, engineering, and processing industries, although the services sector is rapidly gaining attention. (Source: Central Bank of Sweden, 2006)

     A Competitive Cost Position

Over the course of recent decades, Sweden’s cost position has become increasingly competitive. Total salary costs in Sweden for a basket of 15 professional and administrative jobs are considerably below those found in Japan, Germany and France. Costs for manufacturing labor show an even more competitive pattern, with Swedish salary rates placed second-lowest among ten European nations assessed by a grouping of Swedish labor unions.

     Attractive Corporate Tax Climate

At a flat 28 percent, Swedish corporate tax rate is significantly lower than in many other European countries and OECD nations. Possibilities to defer taxation of profit reduce Sweden's effective coorporate tax rate to about 25 percent. The nation also has decreased business costs in comparison to other European countries.

Sweden's tax system is appealing to foreign investors for a number of additional reasons:

• Competitive corporate taxes
• Capital gain exemptions on sales of subsidiaries
• Tax-exempt intra-group dividends
• Full tax relief on interest
• Tax relief for foreign key personnel
• Absence of thin capitalization rules
• Comprehensive tax treaties for the avoidance of double taxation with most countries

     Productivity Growth

Sweden’s productivity increases in recent years have been substantial. According to the US Department of Labor, productivity in Sweden’s manufacturing sector outperformed countries such as the US, Japan and France. Furthermore, Sweden will experience further gains in productivity in the future (OECD).

Trade Balance with the U.S. (2003)

The U.S. has a long history of being an important trade partner to Sweden and at present time the American market is Sweden's most significant export market. In 2003, the Swedish export to the U.S. rose with 2% and was estimated to approximately SEK 94 billions, which is equivalent to 11.5% of Sweden's total export. Sweden mainly exports cars, pharmaceuticals, telecommunication products and energy related products to the US; food and beverages is an increasingly important sector.

Quick Statistics:

• Sweden's business sector is unique for its large number of multinational corporations in relation to the relative size of the national economy.
• Sweden places third in economic competitiveness within the EU, after Denmark and Finland (Source: World Economic Forum, 2006).
• Sweden is foremost in innovation capability (Source: World Investment Report 2006, UNCTAD).
• In 2005, 10,400 foreign-owned companies employed a total of 560,000 Swedes or 23 percent of all employees in the private sector.
• High annual average GDP growth annual average change is at 2.7% and is expected to reach 3.6% in 2006 and 3.1% in 2007 (Source: National Institute of Economic Research, Eurostat, OECD, 2005).
• Inflation has been low for the last decade and is expected to remain low (0.7 percent in 2007) due to a combination of falling import prices, rapidly increasing productivity in the Swedish industry and a weak labor market with limited wage increases.
• Unemployment rate is predicted to fall to 5.0% in 2006 and further to 4.4% in 2007 (Source: National Institute of Economic Research, Eurostat, OECD, 2006).
• Competitive wage costs: € 1.05 million - annual total wage cost with social charges for 15 different company positions, including chief executive, project manager, controller, buyer, receptionist, and production plant manager (Source: Watson Wyatt, 2005).
• Productivity growth rate 6.2% (after South Korea at 6.9%) annual average increase in manufacturing.
• Industrial production growth rate is 1.6%.