Low government debt and a stable banking system make Sweden the envy of the world.
Sweden has remained resilient to the heightened global risks this year, in contrast to Denmark – another EU member state with its own currency.
The sovereign, on a score of 86.9 (out of 100), up fractionally by 0.1 since Q2 2012, has risen two places in ECR’s rankings this year, to fifth, and by 11 places since the survey began in 1993.
Sweden is not only one of the least-risky countries in the world, it has seen its positive score differential to the European average widen from almost 14 points in September 2010 to more than 20 points.
And, unlike its European compatriots, the country has enjoyed a rise in its bank-stability score this year to 8.3, highlighting its comparative strengths vis-à-vis the eurozone, in terms of low exposure risk to sovereign debt.
An upgraded score for the government-finances indicator is notable in that regard. Sweden’s general government gross debt shrank to 38.4% of GDP last year, less than half the EU-27 average of 82.5%, according to Eurostat.
The general government net-lending position is expected to be no more than -0.5% of GDP in 2012, according to the various opinions of private sector experts (Nordic Barometer, August 2012).
As ECR previously noted, the Aaa-rated sovereign is not immune to the global crisis. However, the economy has performed better than most. Real GDP increased in Q2 2012 by a seasonally adjusted 1.4% quarter-on-quarter and a working-day adjusted 2.3% year-on-year, according to Statistics Sweden.
The Swedish model seems like a safe bet for the time being.