(Stockholm, December 18, 2023) — Sweden’s economic landscape is set to encounter a series of challenges in the upcoming years, with a projected dip in GDP fueled by factors ranging from inflation woes to a slowdown in housing construction and export activities.
Inflation and Interest Rates Impacting Households:
The Swedish economy is grappling with the aftermath of high inflation and rising interest rates, particularly affecting rate-sensitive households. The repercussions are evident in the residential construction sector, witnessing a rapid decline. This adverse trifecta is poised to contribute to a slight contraction in GDP over the next quarters.
Depreciated Krona Boosts Exports:
Amidst these challenges, Swedish exports find solace in the form of a depreciated Swedish krona (SEK), aligning with the overarching trend since 2013. Notably, forest products, especially paper, cardboard, and their derivatives, remain pivotal, contributing significantly to Sweden’s export portfolio, valued at 103 SEK billion in 2022.
Housing Construction Conundrum:
The national housing construction landscape is experiencing a significant downturn, attributed to surging construction costs, a tripled housing interest rate, and dwindling household purchasing power. However, pockets of increased construction activities are observed regionally, particularly in the north, driven by the forces of green industrialization.
Forestry Sector Forecast:
The Swedish Forest Agency’s projections shed light on the wood raw materials sector, anticipating a 3% decrease in net felling to 75.1 million cubic meters in 2023 compared to the previous year. Despite challenges, the import of roundwood is expected to rise by 8% this year.
Softwood and Pulpwood Dynamics:
Softwood sawlog removals are preliminarily estimated at 37.3 million cubic meters in 2023, showing a decline of 1.5 million cubic meters in 2024. Conversely, pulpwood removals are expected to increase by 1% in 2023, reaching 31.3 million cubic meters, with a forecasted rise to 31.9 million cubic meters in 2024.
Fuelwood and Residue Trends:
Despite damage to large forest areas by the spruce bark beetle, removals of fuelwood are estimated to increase slightly by 3% in 2023. However, the production of chips and residues is anticipated to decrease due to reduced output in sawmills.
Price Trends in 2022 and Beyond:
Softwood sawlogs and pulpwood witnessed an average price increase in 2022, sustaining a slight upward trajectory in early 2023. As Sweden navigates these economic challenges, the nation’s resilience and ability to adapt will play a crucial role in shaping its economic trajectory in the years to come. (GT)