2019 OECD ECONOMIC SURVEY OF SWEDEN http://www.oecd.org/eco/surveys/economic-survey-sweden.htm @OECDeconomy @OECD
Key messages • Policies should remain responsive to macroeconomic developments • Addressing structural weaknesses in housing and business regulations could enhance productivity and well-being • Reinforcing the school system and maintaining high workforce skills is essential for growth, competitiveness and social cohesion 2
Output growth is robust Real GDP growth Y-o-y % change Y-o-y % change 8 8 Germany Euro area Sweden United States 6 6 4 4 2 2 0 0 -2 -2 -4 -4 -6 -6 -8 -8 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source : OECD Economic Outlook database. 3
Unemployment has declined Unemployment rate % of labour force 16 ITA DEU FRA SWE Euro area OECD 14 12 10 8 6 4 2 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source : OECD Economic Outlook database. 4
The employment rate is among the highest in the OECD % of population aged 15-64 90 80 70 60 50 40 30 20 10 0 ITA IRL ISR G7 FIN JPN ISL TUR GRC MEX CHL ESP BEL FRA KOR LUX POL SVK OECD HUN PRT USA SVN LVA AUT AUS CAN GBR EST CZE NOR DNK DEU NZL NLD SWE CHE Source : OECD Labour force statistics database. 5
The economy is operating close to full capacity % % Capacity utilisation in manufacturing industry 90 7.5 Output gap (rhs)¹ 88 6.0 Resource utilisation (rhs)² 86 4.5 84 3.0 82 1.5 80 0.0 78 -1.5 76 -3.0 74 -4.5 72 -6.0 70 -7.5 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1. Percentage of potential output . 2. Deviation from 2005-2018 average in units of standard deviation. 6 Source : OECD Economic Outlook database, NIER and Riksbank.
Labour productivity has been growing faster than in most other countries 1995=100 1995=100 150 150 EU28 JPN USA DEU DNK FIN 145 145 G7 SWE NLD SWE 140 140 135 135 130 130 125 125 120 120 115 115 110 110 105 105 100 100 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Note: Productivity is measured as GDP per hour worked. Source : OECD, National Accounts, Productivity and Economic Outlook databases. 7
Global uncertainties shroud the outlook • Global slowdown • Trade tensions • Brexit • Financial market volatility 8
Monetary policy remains very expansionary Policy rates Inflation Source : OECD Economic Outlook database and Riksbank. 9
Government surpluses largely reflect the strength of the economy % of GDP % of GDP 4 4 Underlying government net lending¹ Government net lending 3 3 2 2 1 1 0 0 -1 -1 -2 -2 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1. % of potential GDP. Source : OECD Economic Outlook database. 10
Recommendations on macroeconomic policies • Continue to raise interest rates gradually, taking inflation and output developments into account. • Continue to run budget surpluses while the economy remains solid. • In the case of a downturn, use the space provided by the fiscal framework . 11
How’s life in Sweden? Note : This chart shows Sweden’s relative strengths and weaknesses in well-being when compared with other OECD countries. For both positive and negative indicators (such as homicides, marked with an “*”), longer bars always indicate better outcomes (i.e. higher well-being), whereas shorter bars always indicate worse outcomes (i.e. lower well-being). 12 Source: OECD (2017), OECD Better Life Index, www.oecdbetterlifeindex.org .
Perceived corruption is low Corruption Perceptions Index, 2018 100 100 90 90 80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 DNK NZL FIN SWE CHE NOR NLD CAN LUX DEU GBR AUS AUT ISL BEL EST IRL JPN FRA USA CHL PRT ISR POL SVN CZE LVA ESP KOR ITA SVK HUN GRC TUR MEX Note: The Corruption Perceptions Index uses a scale of zero (highly corrupt) to 100 (very clean). Source: Transparency International. 13
Income inequality remains low Ratio of ninth to first disposable income decile, 2016 or latest 5 4 3 2 1 0 Other Nordics Sweden OECD Source: OECD Income Distribution Database (IDD). 14
Sweden scores well on environmental indicators CO2 intensity 1 Environment-related taxes, % of GDP kg/USD, 2010 Energy, 2014 Motor vehicles, 2014 Sweden OECD Other, 2014 Total, 2000 0.4 3% 0.3 0.2 2% 0.1 1% 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0% 1. Production-based. Sweden OECD (median) Source : OECD Green Growth Indicators database. 15
Recommendations on environmental and green finance policies • Raise taxes on industrial energy use. • Strengthen and further harmonise climate-related disclosure requirements, especially for financial intermediaries, including banks. 16
The housing market has cooled, but prices remain high and structural issues remain 1995=100 Canada Norway 400 Euro area New Zealand 350 Sweden OECD 300 250 200 150 100 50 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Source : OECD Economic Outlook database. 17
Recommendations on housing policy • Reform the recurrent property tax. • Phase out the deductibility of mortgage interest rate payments. • Ease rental regulations. • Simplify land-use planning procedures, balancing economic, environmental and social considerations. • Enhance co-operation between central and local government in land- use planning and increase incentives for municipalities to facilitate the timely release of development land. 18
Construction costs are high Construction price EU28=100 200 ISL 180 CHE SWE NOR 160 FIN DNK 140 DEU FRA 120 NLD LUX BEL 100 EU IRL AUT LVA LTU SVK 80 GBR ITA EST POL ESP GRC CZE 60 SVN PRT HUN 40 TUR 20 0 0 20 40 60 80 100 120 140 160 180 200 Consumption price EU28=100 Reading note: Sweden’s construction price level is more than 60% above the OECD average compared to less than 40% for the consumer price level. Source: Eurostat. 19
Product market regulations are lean, but further streamlining could raise productivity 4 Sweden OECD average Average of 5 best performing countries Average of 5 worst performing countries 3 2 1 0 Overall PMR indicator Public ownership Involvement in Simplification and Admin. burden on Barriers in service & Barriers to trade and business operations evaluation of start-ups network sectors investment regulations Source : Preliminary OECD 2018 PMR database (as of 20-02-2019). 20
Recommendation on business regulations and competition policies • Continue to use digital tools to improve services, simplify procedures and shorten licences and permits processing times. 21
Labour market mismatch is increasing Note: An outward (inward) shift of the Beveridge curve over time implies a decrease (increase) in the efficiency of labour market matching. Source: OECD Registered Unemployed and Job Vacancies dataset and Annual Labour Market Statistics, and 22 Statistics Sweden.
Many jobs are at least partially at risk of automation % % 70 70 Risk of significant change (50-70%) High risk of automation (>70%) 60 60 50 50 40 40 30 30 20 20 10 10 0 0 NOR NZL FIN SWE USA GBR DNK NLD CAN BEL IRL EST KOR ISR OECD AUT CZE FRA POL ITA ESP SVN CHL DEU JPN GRC TUR LTU SVK Note: Jobs are at high risk of automation if the likelihood of their job being automated is at least 70%. Jobs at risk of significant change are those with the likelihood of their job being automated estimated at between 50 and 70%. Source: Nedelkoska and Quintini (2018). 23
The low-skilled receive less training than others 70 All adults Low-skilled adults 60 50 40 30 20 10 0 TUR ITA FRA JPN SVN ISR CZE IRL DEU CAN NLD FIN DNK GRC POL SVK ESP KOR BEL CHL AUT EST GBR USA SWE NOR NZL OECD Note: Low-skilled adults are defined as people scoring at or below a PIAAC literacy score of 225 points. Source: OECD calculations based on the Survey of Adult skills (PIAAC). 24
Nearly one adult in five lacks some foundation skills Japan Finland Netherlands Both low numeracy and literacy Slovak Republic Norway Low numeracy but literacy above level 2 Czech Republic Low literacy but numeracy above level 2 Flanders (Belgium) Sweden Estonia Austria Denmark Korea Australia OECD Germany Canada England Northern Ireland Poland Ireland United States France Spain Italy 0% 5% 10% 15% 20% 25% 30% 35% 40% Source: Musset, P. (2015), “Building Skills for All: A Review of Finland”, OECD Skills Studies. 25
Recommendation on labour market and adult skills policy • Develop adult education, in cooperation with the social partners, including for people in unconventional forms of work. 26
Quality and equity in Sweden’s schools
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