Strong exports providing stability as economy slows
Economic activity in the Gothenburg region slowed further during the third quarter, yet the labour market remains stable. Manufacturing improved and is a standout performer, thanks to strong exports. Overall, the regional economy saw weak growth during 2023. These were some of the findings in Business Region Göteborg’s fourth Economic Outlook report of 2023.
The report shows that businesses in the Gothenburg region are experiencing a weakened situation, with the economic tendency indicator falling 3 points during the third quarter to 88.2, which suggests businesses are experiencing a state of recession.
The weakest state is within construction, where three fifths of the companies have a lower construction volume due to weak demand. Employment has decreased and the majority of companies expect a further decline in construction volumes.
In the services sector, profitability has weakened. Demand and employment are stable, although a slight weakening is expected looking ahead. Every fourth company signals challenges around skills supply.
Exports keeping the economy rolling
The Gothenburg region is faring better than Sweden as a whole, and this is due to the region’s large export industry. Manufacturing companies had an economic tendency of 104.7 (+2.1), which suggests a “normal-strong” state. They have increased the production pace and are seeing improved profitability and productivity.
Sweden’s GDP shrunk 0.8% this year, shows the National Institute of Economic Research’s compilation of the latest GDP growth forecasts. Meanwhile, Gothenburg’s 10 key export markets had an export-weighted GDP growth for 2023 of +1.5%. A similar figure, +1.4%, is expected for 2024.
“Compared to previous recessions, such as the financial crisis and the pandemic, our region’s key markets are experiencing weak, but positive growth. The Gothenburg region is export-intensive and this a key reason why our region is performing better than the rest of Sweden.”
In total, 587,000 people were employed in the Gothenburg region during June-August, up 11,000 from last year. This represents a 2.0 per cent increase year-on-year, which is one percentage point higher than Stockholm and the rest of Sweden. At the same time, job growth in the Gothenburg region has lost momentum over the last year and we expect this trend to continue.
“Exports are also benefitting from the weak krona, which can also explain why our region’s labor market is relatively stable,” says Peter Warda.
Large investments creating jobs in Gothenburg
In October, Volvo Cars announced the opening of a new state-of-the-art testing centre for software in Gothenburg, which will initially employ 100 people, and grow to 300 people when fully operational.
In the coming years, large investments such as Volvo Cars and Northvolt’s new battery gigafactory and R&D centre, and Polestar’s new global headquarters in Gothenburg will also create thousands of jobs in the region. Other projects with great job potential include the development around Save Airport and Link 40 in Härryda, where the focus is on sustainable transport and logistics; and GoCo Health Innovation City, the fast-growing hub for life science and health innovation.
Access the report: Economic Outlook #4 2023
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