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Swedish companies are excited to invest in a Swedish low interest regime

Wednesday, 11 January 2012
Sweden's record low interest rates on borrowing have led businesses to push for increased investment mood. According to the latest survey from Statistics Sweden (SCB), companies are showing signs of increasing their investment spirit, a lot more this year than last year.

“Swedish companies are designing very optimistic investment plans,” says Bengt Lindqvist, economist of the association of engineering companies, Teknikföretagen.

This is based on the fact that market interest rates are driven down by low interest rates on the Swedish government securities. Normally banks and other credit institutions pay only slightly higher interest rate than the state when they need to borrow and lone out money to their customers.

“It is market interest rates that affect investment decisions in the long run. Both Swedish and foreign-owned companies in Sweden borrows capital for investment in Sweden. Low interest rates have a positive effect,” says Bengt Lindqvist.

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According to SCB it is expected that companies and different industries will invest to the tone of Skr57.2 billion during 2012, representing an increase of 7 percent compared with last year. Mining and quarrying industries will see their investments increased by 36 percent in 2012 and in the transport sector it will increase by 42 percent.

Member companies of the trade organization Teknikföretagen is planning to make investments of Skr18.6 billion this year, which is 27 percent more than last year, according to reports.
“Technology companies are very optimistic regarding investments. Both the machinery industry with companies such as Atlas Copco and SKF, and others such as Siemens and ABB are very good. But not all investments can not be attributed to the low interest rate,” says Bengt Lindqvist.

Volvo Cars is reported to notice increasing need for companies to buy new equipment. The reason is primarily that the group has been developing new car models. SKF on its part is reported to be a company that is going to lay low.

“We reviewed our loan portfolio last year and have a good financial situation. Just because the government borrowing rates are low today, we do not think we would get a more favourable approach,” says Ingalill Östman, Communications Director at SKF.
By Scancomark.se Team


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