Sweden has traditionally invested heavily into the Russian economy, especially into manufacturing. With its leadership not only in R&D, but equally in rolling out innovation, Swedish experience is of particular interest to Russia. However, bilateral cooperation between the two countries is currently in a slump provoked by weaker oil prices and political reasons. The negative trend can be overcome with more active intergovernmental contacts and more efforts by Russia to attract foreign investment.
In the recent years, the economic exchange between Russia and Sweden has been ebbing.
- In 2012, the turnover reached USD 10.127 billion (having gone up by 93% over the three preceding years), while in 2016, it only stood at USD 3.892 billion. Sweden's share in Russia's external trade volumes went down from 1.3% in 2012 to 0.8% in 2017.
- The trend is mostly explained by falling prices for hydrocarbons, the prevailing product exported from Russia to Sweden. Q1 2017 produced a 40% y-o-y growth, however, it accounted for an even lower portion of Sweden in the Russian external trade volume, a mere 0.86%.
Total investments coming from Sweden remain high at USD 15 billion, which helped create over 30,000 jobs.
- The major part of that investment, up to 40%, is funnelled into manufacturing.
- Russia has around 400 Swedish businesses, which keep expanding their operations. September 2016 marked the launch of a robotic factory in the vicinity of Veliky Novgorod to make furniture for IKEA. The factory has become the largest furniture production facility in Russia thanks to IKEA's investment of EUR 50 million. In June 2016, SCA from Sweden completed the second stage of its sanitary products factory project in the Tula Region. Throughout 2013–2016, SCA had invested some RUB 4.4 billion to expand production. Further investments to build a new factory in the same region have already been agreed on. In October 2016, Volvo opened its first regional centre in Tver. Some of the upcoming regional centres from an extensive network will only be involved in maintenance of Volvo vehicles, while others are targeted as full-scale dealerships.
However, further inflow of money from Sweden could be hampered.
- In November 2016, representatives of the foreign business community spoke at the VI Russian-Swedish Economic Forum. They remarked that unstable legislation made Russian regions less attractive for investors.
Russia offers Special Investment Contracts (SICs), which could be an efficient vehicle to bring in foreign capital. They were introduced by the Russian legislators back in 2015 to guarantee stable tax and customs benefits.
- Swedish businesses have shown a particular interest in pharmaceuticals and machine building SICs.
- Other cooperation options discussed at the bilateral forum back in November included innovative technologies, recycling, car manufacturing, agriculture, high-rise wooden house construction, etc.
Economic ties between the two countries could receive a strategic impetus, should intergovernmental dialogue be revitalised and hurdles to regular contacts be removed.
- Since April 2013, the Swedish side has pretty much frozen the work of the Russian-Swedish Supervisory Committee on Trade and Economic Cooperation. Some of the Committee's working groups carry on though, as do the Working Groups on Investment Cooperation, Finance and Banks, IT and Telecom, etc.
- However positive moves on the intergovernmental level have been observed lately. In February 2017, the Foreign Affairs Ministers of the two states met and decided to restart full-scale operations of the Supervisory Committee. Agreement has been reached to arrange a meeting between the two Co-Chairs of the Committee, i. e. Mr Denis Manturov, Russian Minister of Industry and Trade, and Ms Ann Linde, Sweden's Minister of EU Affairs and Trade.