Victory for the land of Vikings

Growth continues amidst environmental troubles and the slowdown in many world economies.

Boasting a highly industrialised economy, Sweden is also known as a neutral and peace-loving nation. Timber, hydropower and iron ore constitute the resource base of the country's economy, which relies heavily on foreign trade. The main industries that make up the economy include automobiles, telecommunications, pharmaceuticals and forestry.

Sweden is also regarded as one of the most environmentally responsible nations in the world. A report published by Germanwatch, a German NGO that monitors German and European politics on development, environment and economics said: "If there is a paradise for environmentalists, this Nordic nation of 9.2 million people must be it. In 2007 Sweden topped the list of countries that did the most to save the planet – for the second year running."

With finance minister Anders Borg recently revising the GDP figures, Sweden's economy is showing signs of being affected by the global recession. Borg pegged the new forecast for Sweden's GDP growth in 2008 at 2.1 per cent (earlier 3.2 per cent) and for 2009 at 1.8 per cent (earlier 2.5 per cent). These figures show a lower growth than expected because 52 per cent of Swedish GDP is based on exports.

"According to our national economic calculations, the Swedish exports of products and services increased by 6.2 per cent in volume during 2007. The Swedish Trade Council forecast for 2008 sees an increase by four per cent in volume for exports of products and services. Product exports have shown a strong increase during the first quarter of 2008 but the order intake for the rest of the year is dropping. We are evaluating the Middle East as the region which has the largest growth potential for Swedish exports in 2008, but all other growth regions will also show strong import demands. The largest export markets for Sweden in the region are industrial nations such as Saudi Arabia, Egypt and Iran, as most of the Swedish export products are engineering products used in industries," says Daniel Mokari, Associate – Middle East and Africa, Swedish Trade Council.

According to a press release from the Swedish Ministry of Finance, the government's 2008 spring fiscal policy bill is set to meet the challenges facing the country in both the short and long terms and to secure its future development and lead to permanently higher employment and GDP. The government policy will also improve conditions for knowledge in preschool and school, strengthen welfare provisions and put Sweden in a better position to meet the threat of climate change.

The impact of a policy for full employment and economic growth is steadily becoming more obvious. During 2007, the number of people excluded from employment fell by 121,000, the largest reduction in the close to 40 years that statistics have been available.

The international economy is increasingly dominated by turbulent financial markets. Since the budget bill last autumn, storm clouds have gathered and somewhat darkened, worsening the outlook for growth. The Swedish economy is expected to grow by an average of 2.3 per cent between 2008 and 2011. The government's assessment is that the target of a one per cent surplus in net lending will be exceeded by a broad margin in the coming years. Both actual and structural net lending are expected to show average surpluses of more than three per cent of GDP between 2008 and 2011. The national debt continues to diminish and is expected to be 15.3 per cent of GDP in 2011.

According to an article by Cari Simmons on www.sweden.se, Sweden's official website, Swedish make-up companies have moved beyond their home territory to capture loyal customers. Face Stockholm, Oriflame, IsaDora and Make Up Store are some of the brands that are being applied to faces from Moscow to Sydney. Mika Liias, president of the Make Up Store, recently told Swedish business daily Dagens Industri that "Swedish beauty sells." His company opens about four stores a month, and operates in 20 countries.

Oriflame, which sells cosmetics through catalogue and direct sales, racked up sales of $1.4 billion (Dh5.14 billion) in 2006; IsaDora cosmetics are distributed in the US by
market-leading pharmacy retailer Walgreens; and Face Stockholm has a lengthy who's who of customers, from Britney Spears to Bette Midler.

Although Swedish beauty certainly sells, that's only part of the story. Christina Mattsson of KTF, the Swedish Cosmetic, Toiletry and Detergent Association, says: "Swedish products are popular because people associate them with a high level of competence. Our cosmetic companies work according to tough regulations and standards, and people trust Swedish products. We also have a long tradition of producing and selling high-quality products with good retail role models like H&M and Ikea."

Biotechnology and pharmaceuticals

A new market – men – is also emerging. Greta Sjobom of the Make Up Store says more men are buying cosmetics than ever before. "Most of them buy concealer, pluck their eyebrows and look after their skin with different products," she says. And it is having an impact on sales. Between 1997 and 2006, the Swedish cosmetic and hygiene increased its sales from around $1.2 billion (Dh4.4 billion) to more than $18.6 billion (Dh68.3 billion). A healthy market for consumer products in general resulted in an estimated five to seven per cent increase in cosmetic sales for 2007. Mattsson sees no sign of that trend abating, so long as the economy remains stable.

A report published by the Swedish Institute on www.sweden.se, Sweden's official website, says two main types of companies utilise classical or modern biotechnology: mature companies in traditional areas such as pharmaceuticals, food processing or pulp and paper.

In terms of revenues and number of employees, the pharmaceutical companies largely dominate the biotechnology-related industry in Sweden. However, the biotech industry is growing rapidly. Here, drug discovery and development is the clearly dominant sub-sector. It consists of numerous companies, some of them with origins in one of the two large pharmaceutical companies, AstraZeneca and Pharmacia Corporation (since 2003 part of American-based Pfizer).

The first commercial utilisation of modern biotechnology in Sweden was based on technology from the US company Genentech, licensed by the Swedish company Kabi in 1978. Kabi merged with Pharmacia in 1990. Pharmacia later merged with two US companies, Upjohn and Monsanto, to form Pharmacia Corporation.

In 2003 Pfizer, another big pharmaceutical company from the US, acquired Pharmacia Corporation. The other major pharmaceutical company in Sweden, Astra (now AstraZeneca) started using recombinant DNA technology in the late 1980s.

The number of Swedish biotech companies has increased from 136 in 1997 to 213 in 2003. During the same period the number of employees more than doubled to a total of more than 8,600 according to data published by Vinnova (the Swedish Agency for Innovation Systems) in 2005. The two pharmaceutical companies AstraZeneca and Pfizer are also engaged in biotechnology activities. There are many biotech SME (small and medium enterprises) in this application sector, but also in such industries as food processing and agriculture.

During 2005, the industry employed about 22,000 people. More than 90 per cent of its sales were exported, for a total of more than Swedish krona 46 billion or five per cent of Sweden's overall exports. This gave Sweden a positive trade balance in pharmaceuticals amounting to 32 billion kronor (Dh19.9 billion).

The pharmaceutical industry is now dominated by one large multinational company – known today as AstraZeneca. Another company, Pharmacia, used to be a major player in the Swedish pharmaceutical and biotechnology industry. However, following a series of mergers with US firms, a large proportion of the company's activities in Sweden has been spun off or moved abroad.

The remaining parts of the previous Pharmacia are now owned by Pfizer and totally dedicated to prescribed pharmaceuticals. Aside from AstraZeneca and Pfizer, there are a large number of small and medium-sized pharmaceutical companies with development and/or production in Sweden.

A report published on the European Automobile Manufacturers Association website lists Sweden as one of the countries in the world that are most highly dependent on the motor vehicle industry. Despite a population of only nine million, Sweden hosts two important carmakers in Volvo Cars and Saab Automobile and two of the world's leading heavy truck and bus manufacturers – Volvo Group and Scania. In 2006, these two firms accounted for one fifth of the heavy trucks over 16 tonnes produced in the world.

Automobiles

Consequently, the motor vehicle industry is vital to employment, exports, investments, research and development, and the dissemination of knowledge in the country. It employs around 140,000 people and accounts for exports valued at 17 billion euros in 2006, which represents 14.5 per cent of Sweden's total exports of goods and makes it the largest Swedish export industry. One fifth of the machinery and inventories investments and a quarter of the R&D investments of the entire Swedish manufacturing industry comes from the automotive sector.

The Swedish car market is down by 4.6 per cent (January to April, 2008 compared to 2007). Just a few years back, Volvo sold almost only petrol driven cars in Sweden, however, the registration of so-called environmentally friendly cars (i.e. flexifuel (ethanol), bi-fuel (methane gas) and hybrids) was up 103 per cent in April 2008 compared to April 2007.

The market share of these environmentally friendly cars is now 28 per cent. Volvo retains its market share (not segment share) just above 20 per cent. Interestingly, the amount of petrol-driven cars Volvo presently sells is 16 per cent, diesel driven Volvos stand at 50 per cent and flexifuel Volvos at 34 per cent.