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Internal Market, Industry, Entrepreneurship and SMEs
2 MARCH 2022
Sweden - ECSO country fact sheet

In 2021, the Swedish GDP is expected to grow by 3.9%, reaching SEK 4,684.6 billion (EUR 454.4 billion). The country’s inflation is also forecast to increase in 2021, reaching 2.4% .

Over the 2010-2020 period, Swedish GDP increased by 17.8%, totalling SEK 4,508.0 billion (EUR 437.3 billion) in 2020. However, the GDP declined by 2.8% in 2020 over the previous year. In 2020, Swedish economic growth slowed down due to COVID-19 pandemic which negatively impacted private consumption, exports and employment.

Likewise, the number of enterprises in the broad construction sector experienced an increase of 6.8% over the 2010-2020 period, totalling 187,694 in 2020. This growth was primarily driven by the increase in the number of enterprises in the narrow construction (+20.2%) and the architectural and engineering activities (+3.2%) sub‑sectors.

Similarly, the volume index of production in the broad construction sector increased by 21.6% over the 2015-2020 period, mainly driven by increases in the production of construction of buildings (+19.3%) and construction of civil engineering (+49.3%) over the same reference period. Nonetheless, volume index of production in the broad construction sector slightly slowed down by 1.0 i.p in 2020 over the previous year.

Likewise, the total turnover of the broad construction sector stood at EUR 141.7 billion in 2018, exhibiting an increase of 49.0% over the 2010 level of EUR 95.1 billion. It further increased to EUR 146.3 billion in 2020, representing a growth of 53.9% compared to 2010. This growth was mainly driven by the increases registered in all the sub‑sectors including the narrow construction (+77.8%), architectural and engineering activities (+59.2%), manufacturing (+26.3%) and the real estate activities (+18.2%) sub-sectors, over the same reference period.

Number of enterprises in the narrow construction sub sector between 2010 and 2019
Volume index of production in the broad construction sector between 2015 and 2020
Turnover in the broad construction sector between 2010 and 2020

Conversely, the gross operating rate of the broad construction sector, an indicator of the sector’s profitability, decreased from 16.5% in 2010 to 15.6% in 2018. This is lower than the EU-27 average of 16.7%. The real estate activities sub‑sector remained the most profitable (40.4%), followed by the architectural and engineering activities (10.8%), the narrow construction (8.0%) and the manufacturing (7.7%) sub-sectors in 2018.

With regards to employment, there were 718,148 persons employed in the Swedish broad construction sector, representing an increase of 34.0% compared to 2010 (535,817 persons). This was primarily due to the rise in employment in the narrow construction sub-sector (+40.7%), followed by the architectural and engineering activities (+34.2%), the real estate activities (+22.6%), and the manufacturing (+4.5%) sub-sectors over the 2010‑2020 period.

The Swedish government launched several initiatives aimed at supporting the development of the country’s housing market along with the civil engineering sector.

In March 2020 the Swedish government launched its new Larger Accessory Dwellings Bill, aimed at promoting the construction of accessory dwellings, and at the same time, allowing construction of buildings with higher residential quality.

Under its EUR 3.3 billion (SEK 34.0 billion) Recovery and Resilience Plan (RRP), Sweden plans to allocate around EUR 0.4 billion (SEK 4.1 billion) towards energy efficiency of apartment buildings. The RRP also includes investment support for rental housing and housing for students with an allocation of SEK 1.2 billion (EUR 0.1 billion). It aims to stimulate investment in new production of rental housing and housing for students. This in turn would improve mobility in the labour market and for students, which has positive effects for growth. Notably, the Swedish NRRP still needs to be approved by the Council of the EU.

In terms of the civil engineering market, the transport network has been the focus of investment under the 2014-2025 national transport plan, with a budget of SEK 522.0 billion (EUR 50.2 billion). Additionally, in May 2021, the Swedish government proposed an SEK 876 billion (EUR 85.8 billion) 10-year transport infrastructure budget for 2022-2033. This includes SEK 165.0 billion (EUR 16.2 billion) for railway maintenance and operation. Also, the new financial framework (long-term transport infrastructure budget for 2022-2033) includes SEK 799.0 billion (EUR 78.3 billion) in government funding, more than SEK 176.5 billion (EUR 17.3 billion) as compared to the previous 2018-2029 plan. In addition, the country has also proposed to invest around EUR 0.1 billion (SEK 1.5 billion) on railways. This would mainly include upgrading of the infrastructure during the period 2021–2023.

Despite these favourable policy initiatives and investment plans, the Swedish construction sector continues to face difficulties on two fronts. Firstly, the construction sector suffers from deteriorating access to finance. As per the EIB Investment Survey (EIBIS) 2020 report, availability of finance is considered as a long-term barrier to investment by 29.0% of the firms in the construction sector. Secondly, the ongoing shortage of skilled workers continues to be a major concern for the sector, particularly in the infrastructure market. This is especially challenging as the infrastructure market is quite buoyant as compared to both residential and non-residential markets.

Overall, the Swedish construction sector has a positive outlook. Non-residential and civil engineering markets are expected to be the primary growth drivers. In addition, investment energy efficiency measures towards the apartment buildings, digitalisation of economy and EU backed projects are expected to lead the future growth of the Swedish construction sector.