Economy tapers off after longstanding boom
In spite of the ongoing trade conflicts between the USA and China and a slowing of Sweden’s economy, the Gothenburg region is going strong. The long boom period, however, is over, shows Business Region Göteborg’s second Economic Outlook report of 2019.
The report shows that wage sum is increasing, job growth is twice as high as the national figure and unemployment is at its lowest level since the financial crisis.
“The region’s economic activity dampened in the previous period and this trend is continuing. The survey carried out during the spring shows that the economy has weakened and is in a ‘stronger than normal state’,” says Henrik Einarsson, Director of Business Establishment and Investment at Business Region Göteborg, the official investment promotion agency of Gothenburg.
The Gothenburg region’s economic tendency index value for spring 2019 was 24, which is worse than was forecast in last autumn’s survey (40). Looking ahead, companies are somewhat cautious but anticipate the economic situation to improve slightly during the autumn of this year, with a projected index value of 26.
“The boom is definitely over for many sectors, but it doesn’t mean that the market is performing poorly or that a recession is in sight. We are getting mixed signals. Companies are saying that demand is strong and that turnover is increasing. Still, it’s believed that there will be a slower tempo in the future. That’s what happens when you go from peak production and wind it back to a more normal situation; you must make adjustments,” says Henrik Einarsson.
Since autumn 2018, the economic situation in Gothenburg has weakened in almost all sectors. But the automotive and IT industries remain in a boom state with an index value of 48 and 45 respectively, where a value of over 40 indicates a boom. The largest economic declines compared with the survey from last autumn have been seen by the construction industry and the machinery industry.
Unemployment at lowest level since 2007
The Economic Outlook report also shows that the Gothenburg region has employment growth twice that of Sweden as a whole.
“Unemployment is the lowest it has been since July 2007, just before the financial crisis. However, during the next four quarters, we don’t expect to see the same strong job growth. There is more likely a risk that unemployment can increase slightly after the summer,” says Henrik Einarsson.
“Nevertheless it’s still a good situation for Gothenburg. The trade conflicts and Brexit are the things that can shake up the system the most.”
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