Overview: Aided by a long period of peace and neutrality during World War I through World War II, Sweden has achieved an enviable standard of living under a mixed system of high-tech capitalism and extensive welfare benefits. It has a modern distribution system, excellent internal and external communications, and a skilled labor force. Timber, hydropower, and iron ore constitute the resource base of an economy that is heavily oriented toward foreign trade. Privately owned firms account for about 90% of industrial output, of which the engineering sector accounts for 50% of output and exports. In the last few years, however, this extraordinarily favorable picture has been clouded by inflation, growing unemployment, and a gradual loss of competitiveness in international markets. Although Prime Minister BILDT'S center-right minority coalition had hoped to charge ahead with free-market-oriented reforms, a skyrocketing budget deficit - almost 13% of GDP in FY94 projections - and record unemployment have forestalled many of the plans. Unemployment in 1993 is forecast at around 7% with another 5% in job training. Continued heavy foreign exchange speculation forced the government to cooperate in late 1992 with the opposition Social Democrats on two crisis packages - one a severe austerity pact and the other a program to spur industrial competitiveness - which basically set economic policy through 1997. In November 1992, Sweden broke its tie to the EC's ECU, and the krona has since depreciated around 2.5% against the dollar. The government hopes the boost in export competitiveness from the depreciation will help lift Sweden out of its 3-year recession. To curb the budget deficit and bolster confidence in the economy, BILDT continues to propose cuts in welfare benefits, subsidies, defense, and foreign aid. Sweden continues to harmonize its economic policies with those of the EC in preparation for concluding its EC membership bid by 1995.

National product: GDP - purchasing power equivalent - $145.6 billion (1992)

National product real growth rate: -1.7% (1992)

National product per capita: $16,900 (1992)

Inflation rate (consumer prices): 2.3% (1992)

Unemployment rate: 5.3% (1992)

Budget: revenues $70.4 billion; expenditures $82.5 billion, including capital expenditures of $NA (FY92)

External debt: $19.5 billion (1992 est.)

Industrial production: growth rate -3.0% (1992)

Electricity: 39,716,000 kW capacity; 142,500 million kWh produced, 16,560 kWh per capita (1992)

Industries: iron and steel, precision equipment (bearings, radio and telephone parts, armaments), wood pulp and paper products, processed foods, motor vehicles

Agriculture: animal husbandry predominates, with milk and dairy products accounting for 37% of farm income; main crops - grains, sugar beets, potatoes; 100% self-sufficient in grains and potatoes; Sweden is about 50% self-sufficient in most products; farming accounted for 1.2% of GDP and 1.9% of jobs in 1990

Illicit drugs: increasingly used as transshipment point for Latin American cocaine to Europe and gateway for Asian heroin shipped via the CIS and Baltic states for the European market

Economic aid: donor - ODA and OOF commitments (1970-89), $10.3 billion

Currency: 1 Swedish krona (SKr)=100 ore

Exchange rates: Swedish kronor (SKr) per US$1 - 6.8812 (December 1992), 5.8238 (1992), 6.0475 (1991) 5.9188 (1990), 6.4469 (1989), 6.1272 (1988)

Fiscal year: 1 July-30 June