Strong exports behind Gothenburg’s robust economy
The economic tendency indicator has improved in three of the four sectors. Manufacturing and commerce are in a normal state. The services sector has improved and has greater optimism looking ahead. Overall, job growth in the region continues, but at a slow pace. These are some of the findings of our second Economic Outlook report of 2024.
The overall economic tendency indicator for the Gothenburg region was 94.8 for the first quarter of 2024, suggesting firms view the economy as being in a normal-weak state. This was up from 93.1 in the previous quarter.
The improvement was driven by the commerce and manufacturing sectors, where sentiment improved to a normal state (100.6 and 99.7, respectively).
The region’s services sector has seen improvement since the last quarter, but the indicator suggests firms are still experiencing a normal-weak situation (93.8). But looking ahead, firms are more optimistic. More services companies in the region expect that demand will improve and that they will employ new staff.
The region’s construction sector remains in a recessionary state (87.7). Construction volumes, number of employees and tender prices have all decreased. But with the start of the interest rate cuts and rising housing prices, looking a year ahead there is growing optimism looking a year.
The weak economic activity appears to be behind us. Economic growth in Sweden is expected to improve to a weak positive 0.5% in 2024, and improve to 2.3% in 2025, which is higher than the average for the Eurozone.
Stronger export growth than rest of Sweden
For the Gothenburg region's most important markets, economic growth remained positive throughout the recession, unlike Sweden's economy, which shrunk last year. During 2023, the Gothenburg region's goods exports increased by 9% in real terms, or SEK 29 billion. Meanwhile, Sweden's goods exports shrunk by 3% last year, and the Stockholm region's shrunk by 10%.
“Our strong export industry has long stimulated Gothenburg’s regional economy, and sustained growth through the recession,” says Henrik Einarsson, director of investment services at Business Region Göteborg.
“It reflects the strong growth trend we have had in Gothenburg during the past fifteen years. Exports from the Gothenburg region have grown by an average of 5.9% each year since 2009. This represents twice as much export growth as in the rest of Sweden and other Swedish metropolitan regions. We expect that this development will continue. The Port of Gothenburg broke a new container record during the first quarter of this year.”
The labour market is getting tougher
The report also shows that job growth in Gothenburg is still the strongest in Sweden, but now down to 0.6% on an annual basis. This corresponds to 3,000 more people employed in the region during the first quarter of this year, compared to the corresponding quarter last year. Employment has increased year-on-year in all sectors, except for construction and manufacturing, which decreased by 3.5% and 0.8%, respectively.
Unemployment in the Gothenburg region has risen and was 5.8% in April (+0.5 percentage points compared to the same month last year). For Sweden as a whole, the unemployment rate was 6.6% in April.
New car sales during the quarter were weak with 6,060 new car registrations during the first quarter of 2024, down 13% on an annual basis. Housing prices on the other hand are increasing.
“Inflation is falling ever closer to the Riksbank’s targets, and the first interest rate cut came in May. More will follow. Households will be able to spend more again. This will give the Swedish economy a lift towards the end of the year, and in particular during 2025,” says Peter Warda, senior analyst at Business Region Göteborg.
Access the report: Economic Outlook #2 2024
Access the PowerPoint slides: Economic Outlook #2 2024
