ECONOMY
Sweden boasts one of Europe’s most advanced industrial economies and one of the highest standards of social welfare in the world. It also boasts a relatively large number of world-class multinational companies (Ericsson, Volvo). A prolonged period of peace, which included a policy of neutrality during both World Wars, has contributed much to its economic development. Over half of the country is covered by forest, supplying raw material for the wood-based industries – paper, wood pulp and finished products such as furniture – which account for 20 per cent of Swedish material exports. Most of the country’s agriculture is concentrated in the south and central regions and produces dairy products, meat, cereals and vegetables. The agricultural and fisheries sector is, however, fairly insignificant today, accounting for just 2 per cent of GDP. Sweden has a strong industrial sector which produces a number of major exports including vehicles, office and telecommunications equipment, iron and steel, wood products and chemicals. The country is rich in mineral resources, which include 15 per cent of the world’s known uranium deposits and large deposits of iron ore, copper, lead and zinc. Lacking fossil fuel deposits, Sweden has large nuclear power and hydroelectric programs, which meet over 80 per cent of its energy needs.
Sweden was a long-standing member of the European Free Trade Association (EFTA), which linked most Western European economies outside the European Union, before it finally joined the EU in 1995. But there is a strong Euro-sceptic current: so far the Swedes have refused to join the Euro-zone, most recently at a national referendum in September 2003 (despite the endorsement of the national government).
Domestic economic policy has been mainly concerned with making the labor market more flexible and with addressing Sweden’s large government debt. The economy was in recession between 1999 and 2002, but is now slowly recovering. Current annual GDP growth is 1.6 per cent, and this is expected to increase during the next two years. Both inflation and unemployment (2.2 and 4 per cent respectively) are close to the EU average. Sweden’s major bilateral trading partners are Germany, the UK, Norway, Denmark and the USA.
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