Northern economy ‘brighter’ than rest of country in 2023

By Arctic Business Journal - October 10, 2022
The Northvolt Ett battery plant in the Västerbotten town of Skellefteå, due to be completed in 2025, is helping to keep the region’s economic surge going (🖌️: Northvolt)

NORTHERN SWEDEN CAN expect to outperform other regions in the coming year, according forecasts from two of that country’s largest banks.

Overall, Sweden’s economy is expected to contract by 0.7% in 2023, according to Nordea’s annual report, which forecasts growth and employment for Sweden’s eight regions. The Övre Norrland region — comprised of the counties of Västerbotten and Norrbotten — is predicted to grow at a rate of 0.3%, making it the only region not to experience economic decline. Neighbouring Mellersta Norrland, according to the forecast, will see a growth rate of 0%.

Susanne Spector, Nordea’s chief analyst, said: “Övre and Mellersta Norrland will do best next year, thanks to lower electricity prices and a higher level of investment in renewable energy, as well as to the weaker krona, which makes exports less expensive.”

She added: “Everything looks brighter here.”

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In its 2023 outlook, Swedbank credited the wave of investments in Övre Norrland in recent years for placing it in a position to avoid the economic decline the rest of Sweden faces. But it warned that growth in the two regions could be curtailed if energy prices continue to rise.

Pernilla Johansson, Swedbank’s senior economist, said: “Investments require energy and securing the energy supply in the longer term in the wake of an energy crisis in Europe is a challenge. In the near term, the high construction costs mean there will be a slow-down in construction activity.”

Similarly, a lack of labour, particularly in Västerbotten, could slow growth, while regional and municipal officials in northern Sweden have expressed concern that they are having trouble filling public-sector jobs amidst a hiring boom by the high-tech industrial producers who have begun operations there in recent years.