This is how Sweden became a rich country 2019
First off what is GDP?:
Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced in a period of time, often annually or quarterly. Nominal GDP estimates are commonly used to determine the economic performance of a whole country or region, and to make international comparisons.
The Swedish growth.
We will now look at how GDP has developed since 1950 for Sweden, this is quite intresting hand on!
I will show you Swedish GDP history with year of records and also some crises.
Gross domestic product called in short GDP is one of the more important state-economic measures. It describes the size of a country’s economy and how it has changed over time. If we look back in time, one can see that the Swedish economy has had both superb record years but also bigger crises.
Overall, the Swedish economy, or Sweden GDP, has grown on a steady course since 1950. That year, of all goods and services in Sweden the sum was just over 700 SEK billion, measured in today’s monetary value. This means that the size of Sweden’s economy has more 5 doubled.
Times that are bad will result in reduced consumption. Sweden have experienced several periods when GDP has grown slightly, and in some cases even declined. It happens when times get worse and people have less money to move with. This in the mean time reduces demand for goods and services. When fewer people want to consume what the companies produce, the companies have to adapt to it by reducing their production. Fewer produced goods and services mean that GDP grows slower, or even decreases.
The Swedish growth.
We will now look at how GDP has developed since 1950. There have been periods where GDP have increased but also decresed. At the end of the Second World War in 1945, most of Europe was in ruins and needed to be rebuilt. Sweden who hade been neutral in the ww2 didnt have industries destroyed they didint get bombed. The Swedish heavy industry worked overclocked and fast to meet the big demand of machinery, transport, forest, ore and so on. This made Sweden to develop a very high GDP growth, on average about 5 % per year. It is usually called the “record year” in the Swedish economy.
What about the Swedish GDP in the 1970?
In the 1970, the economy is worsening in Europe and Sweden are finding it more difficult to compete with other countries for trade. Oil prices rise sharply due to international conflicts. This factor, together with bigger and increasing wages, makes it expensive for the Swedish industries to produce and causes Swedish industry to suffer its first crisis. The industrial crisis is at its worst in 1977 and leads to a decline in GDP. At the end of the 1970 and in the early 1980, the Swedish currency krona is devalued, it mean the value in relation to other currencies is written down. The purpose is for Swedish goods to cost less for other countries and for exports to take off. This magic works temporarily, but as the industry at the same time receives increased costs due to prices and wages that are constantly increasing, the situation eventually becomes unsustainable in the late 80.
1990 – International Investors have had enough!
In the early 1990, foreign investors lose confidence in Sweden’s economy and do not want to invest here. Its too risky and there are other countries safer and where you can earn more money. The money starts to flow out to other countries. The Swedish Riksbank raises the interest rate sharply because at this time the Swedish krona was not traded at market value but had a fixed rate linked to the ecun, the forerunner of the euro. It had effects on households with loans hard. The banks are having problems losing a lot of money because their customers are unable to pay the higher interest rates. The companies also receive significantly increased costs for their loans, while demand stops. They are forced to cancel people and unemployment is increasing. From 1991 to 1994, GDP is decreasing and Sweden’s economy is shrinking.
IT bubble is getting ready to burst.
During the second half of the 1990, Sweden’s economy is getting better and the banking system is more stable. Around the year 2000 there is a strong belief in the future of the IT sector. People belive IT is the future. Investors are investing a lot of money in shares in the IT companies, which means that they increase in stock value on the stock exchanges markets. But the companies do not live up to the big expectations and the bubble bursts. The shares collapse in value and many IT companies end in bankruptcy. This leads to another international economic downturn. Sweden, however, manages to take the hit quite good thanks to the low interest rates and a weakened Swedish krona that keeps exports up.
What about the 2008 stock crash?
After some good years in the mid-2000, Sweden suffered in 2008 from the global financial crisis, which is a result of the of private individuals, banks and countries. The stock exchanges fall, Swedish exports are lower and unemployment is rising. In 2009, GDP will decrease by over 5%, which is the biggest fall in the economy since the outbreak of the Second World War. In 2010, Sweden is recovering well with high growth. But since then, growth has been smaller, mainly due to the fact that exports have not really speeded up after the financial crisis when it fell sharply.
links: Swedish newest GDP numbers( click me)
With bigger GDP life expectancy will increase read my article about life expectancy in Europe (clicke me)
Stay put there will be a part 2 about GDP.
Hint: you can follow the GDP of some of the bigger economies in the world. If you see negative GDP growth you can try to determine whether an economy is in a recession.
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Source: SACO, centralstatistiska byrån Sverige, ec.europa, EUROSTAT