Sweden – Economy Overview

• Capital: Stockholm
• Area: 449,964 km²
• Population: 9,223,766
• GDP (PPP): US$333.1 billion
• GDP (Nominal): US$455 billion
• Currency: Swedish Krona
• Time Zone: GMT+1

Sweden evolved from an agriculturally centered economy into an industrialized nation in the middle of the 19th century, which caused a great rift between the poor and the newly rich. The rich used their wealth to finance immigration (mainly to the US) which left the country with a vast majority of people living in poverty. This however was all to change with the economic reformation and modernization of the late 19th century. By the 1930's Sweden was boasting one of the highest standards of living in Europe and managed to retain economic prosperity by remaining neutral in both world wars. The post-war boom was kind to Sweden and propelled it to even greater economic prosperity. Sweden had the 3rd highest GDP per capita in the world by the 1970s. This however was a peak and a beginning of a gradual downfall. The 1980s saw the formation of a real estate and financial bubble, and a restructuring of taxation in order to slow down inflation, combined with an international economic slowdown, caused the bubble to burst in the 1990s resulting in a disastrous decade of recession.

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The burst of the bubble created need for economical reform that could realistically sustain Sweden's extensive welfare system. As the international economic outlook improved thanks to a massive growth in the IT sector, Sweden too was able to capitalize on the emerging industry, and the country managed to overcome the crisis. Today, Sweden is ranked 18th in the world by GDP per capita in nominal terms and 30th place in PPP terms.

Industry

Although Sweden is a post industrial economy with most of its industry centered in the service sector, it has a booming telecommunications equipment industry, spearheaded by Sony Ericsson. Sweden is rich in resources, exporting such materials as wood pulp, paper products, iron and steel. Other industries include motor vehicles and pharmaceutical products.

Employment

Until the crisis of the 1990s Sweden managed to sustain a remarkably low unemployment rate ranging from 2% to 3%. The low unemployment rate was a factor in the growing inflation that lead to the recession and in the 1990s the rate grew to over 8%. This rate had been reduced to 5% by 2005. There is no minimum wage legislation in Sweden, instead the minimum wage is usually set by collective bargaining. About eighty percent of the Swedish labor force is unionized, with the unions being independent of government. The percentage of unionized white-collar workers is also exceptionally high - almost as high as for blue-collar workers.

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