Swedish exporters decry the pain caused by strong kroner
Monday, 29 July 2013
The strong Swedish krona has cost export companies billions in reduced profits in the past six months. Should the krona continues to get strengthened further, it may lead to investment shortfall by those exporter in Sweden in the future.
"If we are talking about a Krona that would be strengthened significantly relative to current levels, it will of course affect investment activity in Sweden negatively," says Anders Rune, chief economist from the trade organisation - Employers in the Engineering Industries in Sweden to radio Sweden.
Volvo, Sandvik, Atlas Copco and Scania are some of the companies which in their interim reports in recent weeks referred to currency effects as negatively affecting the performance of their businesses. That has been accounted to reach a whopping several billion in looses
A strong Swedish Krona means that the production costs in Sweden is increasing, while the prices of the goods produced here will be lower abroad. Would the kroner gets stronger, it can significantly affect the companies producing in Sweden. This is said, for example by the engineering group Sandvik's CEO Olof Faxander when the interim report was presented a week ago.
"In the long term, if we see a much stronger position for the krona that will reduce the competitiveness of our production in Sweden. It will also affect Sandvik investment decisions. It will be more cost effective to manufacture products in other parts of the world," the company had written in its interim report.
For smaller companies, which cannot move its production, it is even more difficult, and many see their revenues decline rapidly blamed on the krona.
As uncertainty persist given that no one know which direction the currency effect will go, Anders Rune of Engineering Industries feels that in such an environment characterised by investment plans would only have to awaits for a while.
by Scancomark.com Team