Executive Summary.. 5
Core Views ..5
Major Forecast Changes ....5
Key Risks To Outlook ....5
Chapter 1: Political Outlook. 7
SWOT Analysis... 7
BMI Political Risk Ratings..... 7
Domestic Politics .. 8
More Stimulus Coming...8
The coming economic slowdown will force the Swedish government to decide whether it is willing to return to fiscal deficit in order to
offset a decline in domestic and external demand. We believe that it will attempt to enact further fiscal stimulus, and are now forecasting
general government budget deficits in 2012 and 2013.
TABLE: POLITICAL OVERVIEW.. 8
Long-Term Political Outlook..... 9
Stability Assured Over Long-Term....9
With a long-term political risk rating of 94.5 (out of 100), Sweden is rated among the most structurally stable countries in the world.
Benefiting from an advanced level of institutional development, a long history of democratic governance and an established foreign
policy based on neutrality, the country faces limited underlying risks to political stability over the long term. We stress, though, that it is
in the process of a shift in economic policy towards greater liberalisation and foreign integration, which is expected to continue over the
next 10 years.
Chapter 2: Economic Outlook.... 11
SWOT Analysis..... 11
BMI Economic Risk Ratings ... 11
Economic Activity ... 12
Eurozone Crisis Looms Large.....12
We have lowered our real GDP growth estimate for Sweden in 2012 to 1.6% from 2.0% in light of deteriorating economic conditions in
Europe. Net exports, private consumption and fixed investment are all expected to weaken.
TABLE: GDP CONTRI BUTION TO GRO WTH... 12
TABLE: GDP BY EXPEN DITURE , SE K TER MS BREA KDOWN... 14
Monetary Policy.... 15
Rates On Hold Until Further Notice.....15
Swedens Riksbank is set to leave rates on hold until 2013 at the earliest. External conditions, slowing domestic growth and waning
inflation pressure should be enough to keep the central bank on the sidelines. The risks are tilted towards cuts in 2012.
TABLE: MONETARY POLICY.... 15
Exchange Rate Policy.. 16
SE K: Following Euro Swings...16
The kronas short-term outlook against the US dollar will be determined by the trajectory of the euro, with which the SE K is highly
correlated. For now, rangebound trading looks like the most likely scenario. Significant resistance on the weekly chart comes in at
around SE K6.40/US $, with major support at SE K7.00/US $. A break through the latter would signal significant depreciation, potentially to
SE K8.00/US $ in the first instance.
TABLE: EXCHAN GE RATE .... 17
Balance Of Payments ..... 18
Export Growth Set To Slow..18
Swedens current account surplus is likely to narrow slightly in 2012 as external demand for Swedish exports weakens. However, the
overall balance of payments dynamics will remain relatively healthy given Swedens status as a net international creditor.
TABLE: CURRENT ACCOUNT ... 18
Chapter 3: 10-Year Forecast.. 21
The Swedish Economy To 2021.. 21
Well Positioned For The Long Term....21
Sweden is among the most strategically well-positioned economies in the developed world, and this is reflected in our 10-year growth
forecasts, which call for real GDP to expand by more than one-quarter by 2021. The balance of payments are extremely stable, to be
buoyed by a robust current account surplus; fiscal dynamics are among the best in Europe; and the country will continue to benefit from
a highly productive workforce over the long term.
TABLE: LONG-TERM MACROECONOMIC FORECASTS .... 21
Chapter 4: Business Environment. 23
SWOT Analysis..... 23
BMI Business Environment Risk Ratings.. 23
Business Environment Outlook.. 24
Institutions ... 24
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS... 24
Infrastructure ... 25
TABLE: BMI LEGAL FRAMEWORK RATING... 25
TABLE: LABOUR FORCE QUA LIT Y..... 26
Market Orientation ... 27
TABLE: TRADE AND INVESTMENT RATINGS..... 27
Operational Risk .. 28
Chapter 5: Key Sectors... 29
Pharmaceuticals... 29
TABLE: Generic Drug Market, 2007-2015.... 30
TABLE: OTC Medicine Market, 2007-2015..... 30
TABLE: Patented Drug Market, 2007-2015..... 31
TABLE: Medical Devices Market, 2007-2015.. 31
Chapter 6: BMI Global Assumptions. 33
Global Outlook.. 33
Eurozone Break-Up Risks Rising ...33
TABLE: GLOBAL ASSUMPTIONS ..... 33
TABLE: DEVELOPE D STATES REAL GDP GROWTH FORECAST .... 34
TABLE: REAL GDP GROWTH CONSENSUS FORECASTS .... 34
TABLE: EMERGING MARKETS REAL GDP GROWTH FORECAST ... 35