Economic history of Sweden

Economic history of Sweden

 

The economic process of Sweden is said to be have started after 1870, which is regarded as a latecomer comparing with most West European Country.  However, from that period of time, Sweden experienced an astonishing and sustained rate of economic growth, resulting in a 2.1% per year from 1870 to 1970 on GNP, as compared with 1.5-2% for most West European Country and North America.  This sustained economic growth could not get away from the advanced and comprehensive welfare system.  Correspondingly, a relatively high taxation policy was implemented (figure 1). 

figure 1

However, the economic growth of Sweden is not without a hitch at all.  After 1970, the economy of Sweden have faced  a series of fluctuation.  Specially, economic bloom and recession had taken placed continually afterward, which was contributed by the global economic condition and the policy making of Sweden government.

In the early stage after Swedish Social Democratic Party had come to power, the Sweden government accepted extensive welfare benefits policy.  It resulted in about 5-10% decrees in unemployment for 20 years.  This policy preserved until mid-70s—the first significant economic recession after WWII.  A large unemployment rate occurred.  It drove the welfare policy transformation and facilitated the economic democratization which enhanced the substantial welfares including the protection of unemployment, employment welfare to reconstruct the welfare policy.

During 1991 to 1992, a housing bubble derived by the rapid increase in leading had deflated.  It resulted in a widespread insolvency of bank.  In the figure 2,

it shows a catastrophic unemployment rates during the crisis.  Sweden government had learnt a lesson from that and reconstruct the housing policy to comprehend the economic system.

In the modern economy, as the world will be more globalized, the economy of Sweden is interrelated to the global economic situation.  The financial tsunami caused the downturn of Real GDP.  Looking forwards, the economic growth is gradually recovering.