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Foreign tourists drawn to Sweden by weak krona (and that’s both good and bad)

Sweden's weak krona could attract more tourists to the country this summer – which could have both a positive and a negative impact.

Published: 27 May 2024 06:36 CEST

Foreign tourists drawn to Sweden by weak krona (and that's both good and bad)

Pedestrians at the Strandvägen street in central Stockholm. Photo: Jessica Gow/TT

A good thing for the Swedish economy. When tourists with high purchasing power spend their money in Sweden, they create jobs and growth for the tourism industry, which has a positive effect on the country’s GDP, the main metric to measure a healthy economy.

A bad thing for Swedes holidaying at home, as the influx of foreign tourists may push up prices at hotels and restaurants.

“And that would then show in inflation figures and could make it tougher for Swedish households to holiday at home,” Torbjörn Isaksson, chief analyst at banking giant Nordea, told Swedish news agency TT. “But I don’t want to exaggerate that effect,” he said.

German and French people have, thanks to the euro, increased their purchasing power in Sweden by 30 percent since 2014, according to TT.

EDITOR’S PICK:

What can foreigners in Sweden do about the weak krona?

Brits also have more money to spend in Sweden than they used to, with the pound rising 23 percent on the krona in ten years.

And for Americans, the dollar has increased 62 percent in value compared to the krona. One dollar now costs 10.70 kronor, compared to just above 6.80 kronor ten years ago.

That’s of course if you get paid in euros, pounds or dollars. If you’re a German, French, Brit or American who gets paid in kronor in Sweden, you will find that not only did your holiday in Sweden get more expensive, but you also have less money to spend when you go back home to visit friends and relatives.

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India among top investment destinations for Swedish companies

“The stars are aligned for India. They have got a lot of internal investment programmes started, have acquired internal stability and managed to navigate the geopolitical situation in such a way that no one has any doubts any longer,” said Business Sweden CEO Jan Larsson.

Swedish businesses are in general less optimistic than last year about the global business scene, due to a struggling European economy and escalating trade wars between the US and China, according to a new Global Business Climate Survey 2024 by Business Sweden.

Despite this, many of the 24 countries in the report maintained a generally positive outlook, with scores over 3 on a 5-point scale, where 1 equals very poor and 5 very good.

Overall, just six percent of respondents perceived the business climate as very good, 31 percent as good, 45 percent as neutral, 15 percent as poor and 2 percent as very poor.

There are also some markets where sentiment has improved slightly since last year: Brazil, South Africa, South Korea, the UK and Spain.

At the other end of the scale, interest in investing in giant markets such as China and Germany appears to be on the wane, along with Taiwan and Mexico.

“Doing business in Germany comes with a lot of administrative work compared to Sweden, which is time consuming and costly,” EWAB Engineering GmbH managing director Fredrik Almcrantz said in the report. “Digitalisation doesn’t replace paperwork related to compliance with rules and regulations, it is just an added layer on top of traditional routines.”

Almost a third (65 percent) of Swedish businesses surveyed expect revenue to grow and plan to increase their global investments in the year ahead. A clear majority (70 percent) of companies were profitable last year, while 12 percent reached break-even and 13 percent reported negative results.

The Netherlands and France had the highest percentage of profitable Swedish companies, while the highest share of companies making a loss were reported in South Korea and Germany.

India, the United Arab Emirates, Indonesia and Saudi Arabia are among the countries on the list identified as having the most favourable business climates for Swedish companies, while Germany, Mexico and the Netherlands were rated lowest on the list.

India, Brazil and Indonesia also had the highest share of companies saying that the Swedish brand contributes “to an extent or great extent” to their success in those markets. At the other end of the scale were the United States, Canada and Saudi Arabia.

“In the Indonesian market, Swedish products are generally considered to be high quality, robust and durable,” said M. Syahrul Mohideen, area sales manager at ScanBox Thermoproducts AB.

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