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Sweden drops in leading global business rankings

High taxes and unemployment have pushed Sweden down to ninth place from fifth a year earlier in an annual world competitiveness survey by a leading Swiss business school.

Sweden drops in leading global business rankings
Sweden is still one of the tenth most competitive nations in the world. Photo: Henrik Trygg/imagebank.sweden.se

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The United States remains on top in Lausanne-based IMD's 2015 World Competitiveness Ranking, ahead of Hong Kong and Singapore, which overtook Switzerland.

Canada (fifth), Norway (seventh), Denmark (eighth), Sweden (ninth) and Germany (tenth) remain in the top-10, while Luxembourg moves to sixth from 11th place in 2014.

The rankings of 61 countries are based on statistical indicators, as well as a survey of 6,234 international executives.

One of the crucial factors in the ranking is the “question of business efficiency”, IMD said.

This concerns “the extent to which the national environment encourages enterprises to perform in an innovative, profitable and responsible manner”.

IMD assesses this through indicators related to productivity such as the labour market, finance, management practices and the attitudes and values of the business environment.

“Simply put, business efficiency requires greater productivity and the competitiveness of countries is greatly linked to the ability of enterprises to remain profitable over time,” Professor Arturo Bris, IMD World Competitiveness Centre director, said in a statement.

READ ALSO: Sweden must be able to attract global talent

Tech-savvy Sweden is known for being a booming business country for start-ups and remains within the top-10 in the IMD rankings.

But high costs, taxes and the relatively high unemployment rate of 7.8 percent have pushed it from fifth place in 2014 to ninth in 2015. However, the Nordic country also gets a nod for being efficiently structured and organized, and it is comparatively inexpensive to lay off staff.

“It is a pity that we're dropping, of course. There is no investment, and that depends on political uncertainty concerning energy politics, the debate on profits in welfare services, and taxes on transport, among other things,” Jonas Frycklund, economist at the Confederation of Swedish Enterprise (Svenskt Näringsliv), told the TT news agency.

But economist Torbjörn Hållö of the Swedish Trade Union Confederation (LO) offered a different explanation, saying: “Declining competitiveness is a trend. High unemployment and relatively weak growth are weaknesses. Even the areas of health and environment, where we usually excel, are dropping. We need better ways to combat unemployment and protect what we do best: research, health and environment.”

The IMD 2015 World Competitiveness Rankings

1. USA
2. Hong Kong
3. Singapore
4. Switzerland
5. Canada
6. Luxembourg
7. Norway
8. Denmark
9. Sweden
10. Germany

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BUSINESS

Volvo profits plummet on rising material costs

Swedish automaker Volvo Cars said on Thursday that rising raw material costs and inflation had driven down profits in the third quarter.

Volvo profits plummet on rising material costs

The group posted a net profit of 665 million kronor ($61 million) in the July-September period, a drop of 71 percent compared to 2.3 billion kronor during the same quarter a year ago.

The figure was far below analysts’ forecasts of between 2.15 and 2.19 billion kronor, according to Bloomberg and Factset.

The company’s share price was down by around seven percent in midday trading on the Stockholm stock exchange.

Chief executive Jim Rowan said the company was hit hard by rising raw material prices, record inflation, higher interest rates and the war in Ukraine.

“The macroeconomic uncertainties around the world weighed on our third quarter performance”, he said in a statement.

Revenue meanwhile rolled in slightly higher than analysts’ expectations, rising by 30 percent to 79.3 billion kronor, boosted by “robust” demand for the company’s SUVs.

Analysts had predicted third quarter sales of between 78.1 and 78.7 billion kronor.

Retail sales declined however in some markets, including its main markets Europe and the United States, where the number of vehicles sold fell by 14 and 32 percent respectively.

The carmaker insisted however that its order book remained solid.

Volvo Cars, which aims to have an all-electric fleet by 2030, also reported “sharp pick-up” for its fully-electric vehicles at the end of the quarter, especially in September.

It said sales of fully-electric cars soared by 87 percent in the third quarter, accounting for seven percent of its total sales during the period.

The company, a subsidiary of Chinese group Geely, said manufacturing output continued to improve in the third quarter, but “unforeseen factors” such as power outages and Covid-19 related lockdowns in China “slowed down the pace of normalisation”.

It expected production, wholesale and retail growth in the second half of the year.

“For the full year 2022, we expect slightly lower wholesale volumes than 2021, assuming no further major supply chain disturbances. Wholesale and retail volumes will be on similar levels”, it said.

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