Vital intelligence on Scandinavia
Denmark
Area 43,094 sq km
Population 5.5m
GDP $213.6bn(PPP: $38,900)
GDP growth -2.5%
Inflation 3.5%
Internet users (2007) 3.5m
Unemployment 2%
Foreign direct investment (2007) $11.2bn
Briefing
Denmark’s economic growth has most definitely stalled.Two bank bailout packages have cost £16bn, and Denmark has just overtaken Sweden as the most heavily taxed nation among developed countries.
Support for Anders Fogh Rasmussen, prime minister since 2001, should be enough to give him a good chance of winning a referendum on joining the euro, which he has promised to call before 2011.
The government launched its DesignDenmark initiative in 2007, aiming to boost the design sector by creating ‘fashion zones’ and involving designers in the public sector.
Strengths
Copenhagen ranked fourth in FDI Magazine’s 2008 survey of the European cities with the highest potential for economic development and attractiveness for investors.
Denmark now exports $3.6bn of oil annually from its North Sea reserves; in the 1980s, it imported nearly that amount. Some 20% of its power comes from the wind.
Weaknesses
The Danish Confederation of Industry says this year’s exports will see the worst decline since WWII.
The government hasn’t raised this year’s welfare budget, despite demand increasing. Education is also suffering: state support for universities has been cut by 2%, while fewer students graduating in science will lead to skills shortages.
Finland
Area 338,145 sq km
Population 5.2m
GDP $201.2bn(PPP: $38,400)
GDP growth -2.8%
Inflation 4.1%
Internet users (2007) 3.6m
Unemployment 6.4%
Foreign direct investment (2007) $8.4bn
Briefing
Finland reinvented itself after severe recession in the early 1990s, investing billions in education, technology and R&D. International trade supplies one third of GDP, led by manufacturing, which makes up 31% of the economy. Services contribute nearly 66%.
GDP is decreasing and unemployment rising, but prudent management in past years means the Finnish government is in a strong position financially.
Strengths
Corporate balance sheets are strong, banks hold few toxic assets, and the housing market is relatively stable.
Finland’s schools lead the world in mathematics, reading and science abilities.
Investment in R&D, 3.45% of GDP, is the second highest in the OECD. Finland remains an IT powerhouse, particularly through Nokia’s dominance.
Weaknesses
With relatively little hydropower capacity, much of Finland’s energy comes from fossil fuels, although renewable energy – a target for state investment – makes up 23% of energy use.
High investment in R&D has not been fully converted into the expected growth in innovation, jobs and exports, because it is focused on specific sectors, dominated by a few large companies.
Iceland
Area 103,000 sq km
Population 304,400
GDP $12.97bn(PPP: $42,600)
GDP growth 2%
Inflation 13.4%
Internet users (2007) 202,300
Unemployment 9.4%
Foreign direct investment (2007) $3bn
Briefing
Iceland’s economy will shrink by almost 10% in 2009. The collapse of its three largest banks was the biggest-ever banking failure relative to the size of an economy.
A centre-left government replaced the coalition government in February, following public protests. The crisis has reopened the debate about joining the EU, and most Icelanders favour a new currency.
Strengths
Software, biotechnology and tourism have all grown as Iceland’s economy has diversified over the last decade; the fishing industry remains sustainable.
The country expects to be energy-independent by 2050. Currently, more than 99% of electricity is from hydropower and geothermal energy and more than 70% of primary energy is from renewable sources.
Weaknesses
The IMF says the banking failure could cost taxpayers more than 80% of GDP.
The number of science and engineering graduates is low, and the number of people with only lower-secondary education is high.
Norway
Area 323,802 sq km
Population 4.6m
GDP $267bn (PPP: $57,500)
GDP growth -1.2%
Inflation 3.6%
Internet users (2007) 3.8m
Unemployment 2.6%
Foreign direct investment (2007) $602m
Briefing
Its economy is shrinking, but Norway is still outperforming most of Europe. The country is the world’s third-largest exporter of gas and the fourth-largest exporter of oil. Norway’s services sector is the biggest employer, with 76% of the workforce.
The election in September will be closely fought, but the current centre-left coalition should stay in power.
There are more than 2,300 Norwegian design businesses, but 89% employ fewer than five people.
Strengths
Despite decreases in oil prices, investments in petroleum should remain high.
PM Jens Stoltenberg has set a target of being carbon neutral by 2030. Hydroelectric power supplies 98-99% of Norway’s electricity.
Science output is high, and about 30% of R&D is in higher education. Investment is high in the services sector.
Weaknesses
Norway has trouble attracting professionals and highly skilled workers from abroad.
Greenhouse gas emissions have increased by 15% since 1991. The government has opened up more areas for oil and gas exploration.
R&D as a percentage of GDP is below the OECD average and manufacturing R&D is particularly low.
Sweden
Area 449,964 sq km
Population 9m
GDP $358.4bn(PPP: $39,600)
GDP growth -3.5%
Inflation 1.6%
Internet users (2007) 7m
Unemployment 6.4%
Foreign direct investment (2007) $20.9bn
Briefing
Sweden is vulnerable to the global slowdown through big international exporters like Volvo and Ericsson. Crisis-hit Saab has been put up for sale by General Motors.
The four-party centre-right government has maintained public confidence, though it may not win the 2010 election.
The weakening of the Swedish krona will reopen debate on adopting the euro.
Sweden’s design industry has grown faster than any other in Scandinavia over the past two decades. Design House Stockholm beat international competition to win the commission for a new global range of crockery for Starbucks in 2007.
Strengths
Manufacturing as a whole remains strong, and the annual percentage of GDP from manufacturing is rising.
In the past decade, the number of students in higher education has risen by 50%.
US economist Richard Florida says Sweden has the highest levels of business creativity in Europe.
Weaknesses
Swedish banks are heavily exposed to struggling Baltic economies.
The number of people living on welfare benefits is rising fast. Despite high taxes, pensions are low.