The Mundus Brief: October

The Mundus Brief: October

The Mundus Brief is our summary of the main Swedish news stories over the past month.

Half Way in the “State of Expat Life in Sweden” survey

Our survey has reached the half way point, and we are seeing some clear patterns emerge. However, as the objective is to gain as many insights as we can, from a broad group, please take the survey now by clicking here if you are an expat or here if you are a diplomat.

As a reminder, Mundus is running this online survey together with New in Sweden, and Swedish for Professionals, organisations that share our values of innovation and quality in meeting the needs of the expat community. Our starting point is the benchmark studies run by HSBC and Internations, which identified Sweden as a place that functions well for families, but with distinct challenges around forming meaningful relationships with Swedes and in advancing careers. What is unique about our survey is that we are using qualitative questions, rather than a purely numeric survey, enabling us to build deeper insights and recommend best practices.

So, what do the results suggest so far? One issue that appears to be coming up, is that expats find themselves struggling to understand key aspects of the Swedish system. Some of this has obvious reasons – 71% of respondents want to know more about the housing market, something that even Swedes are struggling to understand. But also, understanding Swedish customs and society is high on people’s minds (60%), as is learning Swedish (63%), which many of the comments suggest is tightly linked to the issue of finding friends.

Qualitatively, the responses given to questions about finding friends and professional development fall into two camps – those who are having a very positive experience, and those who are struggling. There does not appear to be much middle of the road, as summed up in these quotes.

  • Feeling great, super lucky to be where I am. I work in a small company so I have zero big corporate company problems.
  • Cultural differences, language, and lack of insider knowledge are limiting my success. I feel that I am not taken seriously in professional settings due to being an immigrant.

Or is there? Tell us your experience, and we will get back to you with some practical tips and a summary of the report.

 

Monthly Policy Review

The political race tightens

The race between the red-green government block and the Alliance has suddenly gotten much closer. After losing the last election, the Alliance never really made headway under Anna Kinberg Batra, despite the government struggling to convince the voters of its performance. But, Kinberg Batra’s resignation in September, followed by a smooth succession to Ulf Kristersson as Moderate leader has had an immediate positive benefit for the Moderates, whose share is up over 4% in opinion polls.

This dramatic turnaround is attributed to a range of factors, beginning with the negative perception that had developed around Kinberg Batra as leader. Kristersson, has come in as a “new face”, and his performance in two televised TV debates and in making immediate changes to signature issues such as a ban on begging and toughening migration policies has led to a realignment of political forces in Sweden. But, it is not just about the leader, Kristersson and the Moderates have also rebalanced other parts of their leadership group, including bringing in Gunnar Strömmer, a lawyer and former chair of the Moderates youth wing, as Party Secretary, the second most important position in the party.

This may sound like bad news for the Social Democrats and the government, but the reality is that most of the change in polling has occurred within the right. Two thirds of the increase in the Moderates share comes at the expense of the Liberal and Centre parties. Government support is in fact flat, rather than down, and the red-green block is still over a percent ahead of the Alliance parties. However, it does change the calculus for political scientists thinking forward to the September, 2018 poll, with the Sweden Democrats clearly being the biggest losers. Their share has fallen to 16.2% from 17.5% a month ago, a long way indeed from their 20% peak prior to summer. Clearly much can change between now and the next election, but their influence appears to be waning.

It’s the economy stupid …

A wealth of data came in during October confirming the stellar performance of the Swedish economy. Amongst the list of achievements were;

  • 2Q17 GDP came in 1.3% higher, well above previous quarters, due mainly to the performance of exports.
  • Inflation remained in the sweet spot, at around 2%. Not low enough to cause concerns about deflation, but not so high that it would lead the Riksbank to tighten interest rates sooner than forecast, reported Mundus Weekly.
  • The number of people employed has increased by 136,000 in the last 12 months, meaning that employment has grown by more than 2%.
  • The Economic Tendency Indicator climbed for the sixth straight month.
  • The Debt Office raised its forecast for the government surplus, due to higher tax receipts. The surplus is now forecast to be SEK 28 billion, and government debt will shrink from 28% to 24% of GDP during the next 3 years.
  • The booming housing market has flattened. Although not necessarily a positive, reining in house price inflation has been an explicit government target, in order to prevent further financial imbalances building up – specifically household debt. Subscribers to the Monthly Policy Review can read our analysis of the latest developments in the housing market here.

The IMF released a report on the Swedish economy, concluding that Sweden is performing well, with robust growth bringing unemployment down and lifting the budget to surplus. Aided by strong investment, especially in dwellings, growth of about 3.1% is expected in 2017. The IMF stated that job creation at a pace of over 2% ”is remarkable”.

But there is a risk to the rapid rate of job creation – running out of labour. Some estimates suggest that Sweden will need to import 100,000 skilled persons to ensure that this doesn’t become a bottleneck to the economy. Why then does the Migration Agency insist on deporting talented professionals for the most trivial of reasons? This is our feature story in the Monthly Policy Review this month (the article is now available for purchase in the Mundus Store). Better regulations for expats might be on the way, although the bill many pinned their hopes to was rejected by Sweden’s Council on Legislation (Lagrådet).

Business

Sweden’s manufacturing heartland is enjoying great conditions – its automotive industry in particular. Volvo Cars, owned by China’s Geely, increased its operating profit by 77% compared to the same period last year. Sales increased in all regions, especially in China, where they were up 34%. The company expects to beat sales records for the fourth consecutive year.

Ericsson remains the biggest exception to the success story in traditional industry – it reported a sea of red ink, and announced 14,000 redundancies, mostly outside of Sweden. Nordea also announced a large number of redundancies (6,000), which the company attributed to technology changes in the industry. Already 20% of jobs in banking have disappeared over the last 10 years. Nordea’s CEO predicted that a further 50% could go.

Elsewhere the story is of further growth. Spotify continues on its path to an IPO, and was able to announce that Microsoft would collapse its music streaming service into Spotify, and recommend the service for Windows users. Mundus News reported that IKEA, the mega-retailer, announced geographic expansion in South America and South-East Asia, with a goal of dominating the global furniture market. It also announced acquisitions, bringing two start-ups into its group, in order to increase customer service and drive renewable energy uptake. Finally, it decided to provide online retailing, as it adjusted to the threat from Alibaba and Amazon.

Northvolt, the vehicle battery start-up, announced a strategic partnership with ABB, and decided to make both Västerås and Skellefteå centres for its planned battery plants.

Security remains high on the agenda         

Security still remains high on the political agenda, with a number of bomb blasts targeting the police themselves causing great concern within the force, and being interpreted more broadly as yet another sign that Sweden’s much cherished civic safety is at threat. PM Löfven went as far as calling one blast “an attack on democracy”. Nonetheless, by international standards Sweden still remains a very safe country. The Economist Intelligence Unit ranked Stockholm as the eighth best in its 2017 Safe Cities Index behind noted safe places, like Singapore, Japanese and Australian cities.

Last but not least

In our latest background paper, we cover state-owned businesses, a surprisingly large sector of the economy, that successive governments have relied upon for billions in dividends to prop up the budget. Subscriber can access the article here. The article will also be available for individual purchase in the Mundus Store in a couple of weeks. And finally, the Monthly Policy Review featured a report on Sweden’s effectiveness and contribution to the UN Security Council.

Mundus News

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Sean is responsible for Mundus’ strategy and commercial activities. He began his career in the oil industry Australia. After working internationally in commercial roles with BP in South Africa, the UK and Singapore he moved to Sweden with his family in 2009. He worked in business development and then as the Strategy and Growth Director for NASDAQ Commodities from 2009 to 2015. Sean holds an engineering degree from Adelaide University and an MBA from the Darden Business School at the University of Virginia.