The Gothenburg region on its way to a boom
The National Institute of Economic Research's summary for the first quarter of 2021 shows that the situation in the region's business environment has improved sharply. The economic tendency indicator for the first quarter of 2021 remains at 107.5 (up 10 units compared to the previous quarter) for companies in the Gothenburg region. This indicates a normal strong position that is well close to the next interval limit of 110, which is the limit for a boom.
At the same time, key export markets' GDP is forecast to grow more in 2021 than previously expected. The USA, which is the Gothenburg region's largest export market, is expected to grow by 6.4 per cent in 2021. China's GDP is expected to grow by 7 per cent and the Eurozone by 4 per cent. Thus, growth in the region's ten largest export markets is weighted at 4.7 per cent in 2021. Going forward to 2022, the export weighted GDP growth in key markets will stops at 3.7 per cent.
- That growth confidence in our key markets is further strengthened is extremely important for the region's export-intensive business environment as close to 80 per cent of the Gothenburg region's total export value goes to these countries says Peter Warda, Senior Analyst at Business Region Göteborg.
Unemployment is declining and redundancies are at record low levels
Unemployment in the Gothenburg region continues to decline. In May 2021, the unemployment rate was 7.3 per cent (-0.3 percentage points on annual basis), which is lower than the Stockholm region's 7.8 per cent (-0.1) as well as for Sweden as a whole, where unemployment remains at 8.1 per cent (-0.4). Just over 40,000 people are unemployed or in labour market policy programs in the Gothenburg region.
In the beginning of the pandemic, redundancies increased dramatically in the Gothenburg region and then turned down to a record low level already at the end of 2020.
- The average for the period February to April 2021 amounts to 161 redundancies per month. It is well below the median for the 2000s of 313 redundancies per month and is one of the lowest registered levels of redundancies in the region historically, says Peter Warda.
Stronger position for both commerce and services
The Covid-19 pandemic has hit hard on employment in the region for just over a year now and job growth has not yet picked momentum. However, we see some bright spots. Among other things, ICA's central warehouse in Arendal will generate hundreds of new hires. Einride and Geely are also expected to recruit around 100 people each in Gothenburg.
In both the services and commerce sectors in the Gothenburg region, staff reductions ceased during the first quarter and companies are currently at a stagnant employment. Commerce companies are experiencing a boom for the first time since 2015, even though the situation for the region's retail stores has remained tough, especially in Gothenburg's inner city. Services companies are forecasting rising demand and every third person is expected to hire during the second quarter of 2021.
- We see a strong optimism building in the business environment, even though there is an exception for certain industries. The vast majority of companies have left the pandemic behind and are looking ahead with great confidence, says Henrik Einarsson, Head of Establishment at Business Region Göteborg.
Housing prices are rising and bankruptcies are still fewer
In April 2021, the prices of flats rose by 9.1 per cent in Gothenburg, while house prices in the Gothenburg region rose by 22.6 per cent, calculated on an annual basis.
Since the pandemic began in March 2020, 845 companies in the region have filed for bankruptcy until April 2021. This is 5.7 per cent less compared with the corresponding period the year before the pandemic, but the affected companies have been larger. Approximately 3,500 employees have been affected, of which most in March and April 2020.
Continued difficulties for the hospitality sector
The hospitality sector is still having a very difficult time. During the first quarter of 2021, Gothenburg Landvetter Airport had 89 per cent fewer air passengers compared to the corresponding quarter in 2020. The number of guest nights at the Gothenburg region's hotels, hostels and campsites decreased by approximately 57 per cent. Above all, there are fewer Swedish guests, but also fewer foreign guests. The hotel's occupancy rate during the first quarter of 2021 was 21 per cent, which can be compared to 50 per cent the year before.
You will find all current reports from Business Region Göteborg on our website on the page Publications.
Henrik Einarsson, Head of Establishment at Business Region Göteborg
Phone: 031-367 61 27
Peter Warda, Senior Analyst at Business Region Göteborg
Phone: 031-367 62 11