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Gothenburg's strong economic activity weakens slightly

13 September 2022
Economic activity in the Gothenburg region has slowed to a normal-strong state. Employment is growing as strongly as before, the unemployment rate continues to fall and companies continue to advertise vacancies. However, growth forecasts for 2023 are less optimistic, due to the shaky global situation, shows Business Region Göteborg’s third Economic Outlook report of 2022.

Compared to last spring, the economic situation is now more variable between different sectors. The overall economic tendency for the second quarter was 109 – which indicates a normal-strong situation. Manufacturing is still going strong (122.6) and companies in construction and services also experience the quarter as normal-strong situation (103.7 and 105.9, respectively). Meanwhile businesses within commerce have experienced a weakened situation (97.5).

One reason for the dampening is that GDP growth in the Gothenburg region's ten largest export markets has weakened and is expected to be 2.6 per cent for the whole year 2022. And forecasters expect growth to shrink further next year.  

With a shaky global situation that includes Russia's war with Ukraine, disruptions in supply chains, high and volatile energy prices, rising inflation and rising interest rates, weak growth is expected. The Chinese market is expected to grow by 4.8 per cent, but the Eurozone by only 1.0 per cent. Sweden's GDP is estimated to increase by 0.5 per cent next year, and the forecast for the region’s most important export market, the USA, is +0.8 per cent growth. The overall assessment is 1.5 per cent growth for the Gothenburg region's ten most important export markets (export-weighted).

“Here and now, companies perceive the economic situation as strong, and they are looking to recruit people with the right skills. But the forecasts ahead from banks and institutes are less positive,” says Henrik Einarsson, director of business establishment and investment at Business Region Göteborg.

“It’s important to remember that it is extremely difficult to assess future developments. There is a lot of uncertainty in the global economy. Therefore, we see many companies working hard to transform and secure their supply chains,” says Henrik. 

Lower unemployment than in the rest of Sweden - and greatly increased employment

At the end of the second quarter 575,000 people were employed in the Gothenburg region. This is 20,000 more than at the same time last year, and indicates an increase of 3.6 per cent year-on-year, which is higher than for Sweden as a whole.  

The unemployment rate has also fallen and was 5.8 per cent in the Gothenburg region during August 2022. This is approximately one percentage point below the figure for Sweden as a whole (6.7 per cent), and lower than in both the Stockholm (6.5 per cent) and Malmö regions (9.0 per cent).
Vacancies for permanent positions remain at a high level, with approximately 11,000 advertised positions per month (May to July 2022). This is 65 per cent more than in the same period last year. AstraZeneca, Annotell and Northvolt are among the companies that are hiring. 

Fewer flats being built

New housing construction has dropped dramatically during the first half of 2022 (- 47.5 per cent year-on-year). During the period construction of around 2,300 houses and flats in the Gothenburg region was started, compared to 4,500 in the same period last year. The biggest decrease was seen in the construction of new flats, which totalled 1,800, compared with 3,800 in the same period last year.

Housing prices are falling

In July 2022, we see that both the short-term and long-term housing prices have fallen. The sharpest price fall for flats during the past 12 months is observed in Gothenburg (-4.6 per cent), while the Malmö region sees the largest fall in house prices (-5.0 per cent). 

All-time-high for guest nights

Travels to and from the Gothenburg region continue to rebound at a good pace. During the period May to July 2022, Gothenburg Landvetter Airport had an average of just over 468,000 air passengers per month (+216% on an annual basis). 

During the period May to July 2022, the number of guest nights spent at the region's hotels, hostels and camp sites rose sharply (up 56 per cent) to an average of 649,000 per month – an all-time-high in the region.

“Even occupancy rates in hotels have been at near record levels. In July, the occupancy rate was 85 per cent, which is very close to the record levels seen in July 2019. Since May this year, it’s been a very strong period for the region’s hospitality sector,” says Peter Warda, senior analyst at Business Region Göteborg.

 

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