But the city will still face challenges over the year ahead. To find out more about which sectors look most resilient, the skills Stockholm most needs, and opportunities for budding entrepreneurs, The Local spoke with Staffan Ingvarsson, CEO of Stockholm Business Region.
How hard will Stockholm be hit?
Recent economic data suggests Sweden has performed better than expected in 2023 so far. Nonetheless, as the only EU country forecast to see its economy shrink over the entire year, there’s no room for complacency.
Sweden’s policy interest rate, now 3.75 percent, is likely to rise again in autumn to stem inflation – and this could have a major impact on economic activity.
“Looking at the prognosis from Riksbanken [Sweden’s central bank] and the larger banks, there seems to be a managed downturn in the economy,” says Ingvarsson. “In the construction business and some services businesses, especially consulting, we can see that there’s a cooling off right now. But not as much as we expected.”
He believes 2023 will be better than projected at the start of the year but says a slowdown is likely during winter and going into 2024. Ingvarsson is optimistic that the downturn will be “relatively mild” and points to the “scope of the business sector” and “internationalisation” in Stockholm as reasons to believe the city will be less hard hit than most of Sweden.
He concedes, however, that knock-on effects from the war in Ukraine, the energy crisis and inflation abroad make forecasting difficult.
“If it becomes a sharper downturn and really hits the real estate market, then I think Stockholm might be in for a bumpy ride because the vast amount of money in the real estate sector in Sweden is in Stockholm,” he adds.
Which sectors are still thriving?
Stockholm’s startup scene is enjoying huge success at home and abroad. Ingvarsson names several areas, where talented individuals are sure to continue finding opportunities in the city.
“If you look at start-ups, the tech sector, life science, everything connected to the green transition and advanced manufacturing, all these areas are winners in the long run and are going really strongly. It’s a battle for talent in those sectors.
“We compete with London, Paris, Berlin, Amsterdam, and in some aspects with Tel Aviv, Singapore, Boston and some others. There’s a lot of talent in Stockholm and we work all the time to make it easier for local and international talent to move here.”
Importantly, he says , venture capital is much easier to come by than a decade or so ago. “Of course, there’s a higher cost for money now, but there is money out there that’s going into ideas and companies that you expect to start making money in a couple of years.”
More surprising has been the recent strength of Stockholm’s tourism industry, he adds. This is partly due to the weakness of the Swedish kronor, attracting both European visitors and Swedes to the city.
“We’ve seen more people enjoying the restaurants and spending hotel nights in Stockholm,” Ingvarsson says. “There’s a currency effect because it’s rather expensive to go to London for a weekend and you can go to Stockholm instead. Swedes can also save on airfares this way and international visitors enjoy great exchange rates for spending in Stockholm.”
All this has been reflected in local labour market figures, he says. “That’s good because it’s a sector which employs people who might not have university degrees and we know those groups will be hit harder when the economy cools down.”
Which skills are in high demand?
A downturn often prompts people to switch careers. So, which skills does the CEO of Stockholm Business Region expect to be in high demand in future?
“Everything connected to the tech sector will continue to be strong,” he says. “There’s a lack of civil engineers and a shortage of 70,000 skilled IT workers. If you have that kind of education and move to Stockholm, you’re extremely likely to get a good job.”
Ingvarsson is also quick to emphasise opportunities for skilled jobs that don’t demand a university degree. “There’s a shortage of fibre optic technicians, for example. There are a lot of businesses connected to the tech sector and the green transition that really need electricians. The life science sector naturally needs postdocs from the Karolinska Institute or MIT. But there’s also a demand for highly-skilled labour when it comes to the manufacturing of drugs and vaccines.”
Time to try entrepreneurship?
It’s sometimes argued that a difficult economic period is a good time to start your own business. The city of Stockholm offers a number of programmes to support budding entrepreneurs.
“If you’re thinking about starting a business in the city, there’s a free of charge service called Starta eget Stockholm,” says Ingvarsson. “You can choose which kind of support you need for 10 hours to get you started.
“If you’re more into the traditional startup ecosystem, I would look into the Startup Academy online course that Sting (Stockholm Innovation and Growth) put out this year. You get extremely knowledgeable people guiding you through the various steps of creating a startup.
“If you’re connected to the universities, there are also incubators there. If you live in Stockholm today, there are quite a few opportunities to get free support to begin with and then when you get going, there are a number of hubs and incubators where you either pay a small fee or they take a small part of the stock.”
Support is also available for those overseas looking to move into the city. “If you’re an entrepreneur or an investor looking to establish yourself in Stockholm, we at Stockholm Business Region offer a free of charge service for that to help you as an international to get settled in Stockholm.”
Liveable, vibrant and open
The next year could be a challenging time economically in much of the world. But Ingvarsson says Stockholm remains focused on attracting international talent and ensuring the city is “a highly liveable place”.
“Making sure the downturn doesn’t mean we stop producing new homes is extremely important. We need to work with the cultural and real estate sectors to make the city a fun, vibrant place to be. We also need to make sure that international connections by train, boat and air are open and growing.
“I think we’re starting from a very strong position with a lot of skilled people living here, an open, vibrant economy and the fact that we weren’t as hard hit as other cities by the pandemic. We should recognise that and build on that.”