Gothenburg withstanding the pandemic better than expected
Industry and large parts of the business sector have so far withstood the effects of the Covid-19 pandemic better than expected. The regional economy remains in a difficult situation – but there are signs of light at the end of the tunnel, according to Business Region Göteborg’s latest Economic Outlook report.
The economic tendency, which is based on a comprehensive survey of businesses in the region, showed improved optimism during the third quarter and moved from a ‘recession’ to a ‘normal, weak’ situation.
But the regional economy is still strained. GDP growth of the region’s key markets is negative, jobs growth is shrinking, and the unemployment rate has increased by 2.1 percentage points to 7.9 per cent, which is still the lowest among Sweden’s metropolitan regions. In addition, many people in multiple industries have been notified of termination or placed on the short-time work scheme.
“Industry and large parts of the business sector seem to have withstood the effects of the Covid-19 pandemic better than expected. This is something we see in both the regional and national economic tendency surveys. Locally, we can also see that businesses in hospitality, tourism, events and retail have a very tough situation right now,” says Henrik Einarsson, director of establishment and investment services at Business Region Göteborg.
new vaccines - a cause for optimism
With the Swedish governments updated guidelines to limit the spread of infection, businesses will be negatively affected, and it is still unclear when demand will return to a more normal level. In general, it’s still uncertain how hard the Covid-19 pandemic and the ongoing second wave will impact the region’s businesses.
“The negative global developments will impact the region’s export-intensive business environment, but it’s hard to say to what extent. Clearly, the global market has weakened significantly, which has led to a reduction of both turnover and demand for labour. Our export-weighted GDP growth of the region’s key export markets shows a shrinking of 5.3 per cent during 2020,” says Peter Warda, senior analyst at Business Region Göteborg.
The region’s key export markets, however, are expected to rebound in 2021 with anticipated GDP growth of 4.5 per cent. At the same time, the coming vaccination efforts against Covid-19 provide further hope of a turnaround.
“The new vaccines are promising and a cause for optimism. But it all depends on how fast we can reduce the infection rate, how quickly a mass vaccination of people across the world can start and how fast the Gothenburg region is out of the starting blocks,” says Peter Warda.