Sweden Economic Stimulus Package

By: EconomyWatch   Date: 30 June 2010

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A Sweden economic stimulus package of $1 billion was announced on 5th December 2008 to overcome global financial crisis by ways of infrastructure development and investment in human capital. This economic stimulus package of Sweden has been devised to stabilize itself in an environment of global export scarcity.

Sweden being an export oriented economy is greatly dependent on global market conditions and is urgently in need for an economic stimulus package to Sweden. With dwindling exports it became necessary to create alternative avenues of revenue and an economic stimulus package for Sweden could come in handy in this regard.

Human capital empowerment is not only a worthy investment but also an effective form of investment. Investment in human capital is done in forms of on job training, vocational workshops, and restructuring at workplace. As part of an economic stimulus package to Sweden social welfare benefits are also extended to individuals facing short or long term unemployment. As part of this social benefit program, Swedish economic stimulus package has set a target of training about 59,000 individuals in 2009, 72,000 in 2010 and 34,000 in 2011.

Calculated monetary regulations have been implemented in economic stimulus package in Sweden with an aim to stabilize money supply. Commercial banks’ borrowing rates from Swedish central bank has been reduced to 2 percent. These commercial banks extend a wide gamut of credit instruments to private business houses. Domestic as well as overseas investors have access to these commercial banks for their respective capital needs. Commercial banking in Sweden is concentrated among four banks controlling over 80 percent of total banking operations in country.

Foreign countries are permitted to invest in most sectors and activities except for sales of alcoholic beverages and pharmaceuticals, which are monopolized by Swedish government. Though acquiring licenses and permits for setting up industries are complex, efficient bureaucracy and effective laws makes procedures convenient.

Private enterprises account for 90 percent of total industrial output out of which 50 percent are from engineering sector. This industrial sector contributes 29 percent of Sweden’s gross domestic product (GDP) and provides employment to 22 percent of available labor force. Services or tertiary sector is Sweden’s largest contributor to GDP and labor market with shares of 69 percent and 76 percent respectively. Real growth rate of GDP in 2008 was estimated at 0.9 percent.and inflation at 1.6 percent. Gross fixed investment was calculated at 19.6 percent of GDP in 2008. Sweden economy stimulus package has been augmented by its foreign exchange and gold reserves amounting to $31 billion approximately.



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