Swedish exporters urged to look beyond Europe
Share with others:
STOCKHOLM -- Sweden is telling its exporters to target markets outside Europe amid signs the largest Nordic economy is losing faith in the euro zone's ability to drag itself out of the debt crisis.
Sweden will miss its goal of doubling exports in three years from 2010 levels if companies don't heed the government's advice, according to Trade Minister Ewa Bjoerling.
"Achieving that goal looks very tough right now given the situation in the euro zone and our big reliance on Europe," Ms. Bjoerling said June 15. "We are vulnerable."
Sweden is urging its exporters to learn from past crises and turn to regions where a middle class of consumers is growing, not shrinking. Asia, Africa, the Middle East, Brazil and Russia all provide better growth prospects than much of Europe, Ms. Bjoerling said.
Group of 20 nations used this month's summit to find a solution to Europe's woes after Spain on June 9 became the fourth euro zone nation to seek a bailout. The rescue package, which targeted banks in the currency bloc's fourth-largest economy, failed to calm markets and Spanish 10-year bond yields surged above 7 percent this week.
The International Monetary Fund won pledges from emerging nations to almost double its resources to $456 billion as Europe becomes the world's biggest recipient of emergency aid.
Swedish companies are already shifting focus away from Europe. Holmen AB, a maker of paper and consumer packaging that generates 90 percent of its sales in Europe, plans to send more of its products to Asia to escape the destructive fallout of the debt crisis.
"More of what we produce in Europe will be redirected so it's sold outside" the region, Holmen Chief Executive Officer Magnus Hall said. "It's tough to find growth in Europe -- it basically doesn't exist."
SKF AB, the world's largest maker of ball-bearings, is cutting 400 jobs in Germany in addition to about 650 staff reductions made in the fourth quarter of 2011, mainly in Europe. The company, based in Sweden's second-biggest city, Gothenburg, is adding about 1,000 jobs a year in Asia.
Volvo AB's construction-equipment unit, the world's third- biggest maker of wheel loaders and excavators, doesn't see "any signs" of improvement in the construction markets of Spain, Portugal, Italy or Greece, unit head Patrick Olney said in May. "The market collapsed in 2009 and has not shown any recovery since."
Sweden's defense industry has also been hit by Europe's crisis as governments struggling to balance their budgets sacrifice military spending, said Hakan Buskhe, the CEO of Saab AB, which makes Gripen fighter jets. European governments "are keeping a very tight grip on their wallets. The big growth in defense now is in Asia."
Sweden shipped 71 percent of its 1.21 trillion kronor ($174 billion) in exports to Europe last year, down from 75 percent in 2007, government figures show. Outside the 17-member euro zone, Sweden sends most of its goods and services to its Nordic neighbors, Britain and the United States, according to the statistics office.
The OECD estimates that the U.S. economy will grow 2.4 percent this year. It sees an expansion of 4.5 percent in Russia, 8.2 percent in China and 7.3 percent in India. South Africa's output will grow 3.3 percent this year, according to the Paris-based group.
"We need to highlight new markets and identify where economies are growing; where there is an increasing middle-class that needs more products," Ms. Bjoerling said. "China is one of these markets, India another, but there are also several African countries with growth that many countries can only dream of. ...
"The companies that coped best during the crisis in 2009 were exactly the companies that didn't only have the EU as their market but had many other markets," Ms. Bjoerling said. "They must act as role models for other companies that want to move outside the EU. We have learned from the previous crises."
First Published June 25, 2012 12:00 am