Growing differences in growth – Asia is pulling away

Stefan Karlsson, chief analyst at EKN, presents his latest global outlook for 2023. Sweden’s exports are going strong, global inflation is finally on the way down – and export companies should be aware that Asia will increasingly become the world’s engine of growth.

What is the state of the world economy really like?

  • According to the IMF’s latest forecast, the economy will bottom out this year and then turn upwards. However, the forecast shows that global economic growth will be weaker this year and next year than it was in 2022. However, it depends on where in the world you look – the difference in growth rate between Asia and other regions increases during the year. This year, for example, the euro area is expected to grow by 0.8 percent while Asia grows by 5.3 percent. And, which is important for Swedish export companies to think about, Asia is no longer just a region to trade from. 35 percent of all world imports go to countries in the region.

And what does inflation look like around the world?

  • The historically high inflation, especially in the OECD’s high-income countries, is considered to have peaked and is now gradually falling. In the United States, it peaked in June 2022 and has fallen every month since. The annual rate was 3.9 percent in March, while the key interest rate is five percent. The European and Swedish central banks have been later in the interest rate hike cycle. In May, their key interest rates were 3.75 percent and 3.5 percent, respectively. For all three central banks, interest rate increases are expected to end during the summer, although it is not unlikely that another increase could follow in the autumn.

What does this mean for Swedish exports?

  • Swedish exports are going well! Swedish goods exports developed strongly last year, helped by a weak krona. The increase in value was a total of 23 percent, but in the increasingly important Asia the increase amounted to a more modest 16 percent. During the first two months of 2023, merchandise exports continued to increase by 17 percent. Exports to EU countries remain strong with an increase of 20 percent, while exports to Asia are again increasing less than to other regions.

Finally, can we make some cuts to how things look in key export markets?

  1. Latin America
  • Swedish exports to Latin America increased by a whopping 47 percent last year. In 2023, however, growth in the region is expected to amount to a weak 1.6 percent, which makes the region the weakest growing with the exception of Eastern Europe, where the conflict in Ukraine affects growth. Many countries, including Brazil and Chile, are battling inflation, falling export earnings, weak production data and rising unemployment.
  1. Asia
  • In Asia, with China and India at the forefront, strong growth will continue in the coming years. The fact that China’s economic cycle is out of phase with the rest of the world is due to the dismantling of the strict covid strategy at the end of December 2022. After low GDP growth in 2022, three percent, the economy is now at the beginning of a recovery phase. In India and Southeast Asia, growth remains robust – 5.9 percent in India and 4.5 percent in Southeast Asia. In general, Asia has not been hit as hard by inflation as Europe and North America, and even here inflation has probably already passed its peak.
  1. Europe and North America
    The euro area, the rest of Europe and the US will be in a continued high inflation environment in 2023 and this contributes to subdued economic activity. With growth figures of between 0.8 and 1.6 percent for the year, the ”West” is growing the slowest in the world this year, along with Latin America. In the next year, US growth drops further to 1.1 percent. Eurozone growth is increasing slightly, but even in 2024, the OECD countries thus exhibit the lowest growth in the world.

Are you thinking about exporting?

Våra medlemmar kan IT

Mer än 100 svenska företag har direkt eller indirekt del av sin IT-utveckling på Sri Lanka.

Flera av våra medlemmar i Sweden-Sri Lanka Business Council arbetar med IT och bistår svenska företag med deras utveckling. SSLBC har också medlemmar som startat egna dotterbolag på Sri Lanka dit större delen av företagets IT-utveckling är förlagd.

Tag gärna kontakt med någon eller några av medlemmarna för att lära dig mer om hur IT-offshore fungerar eller hur du bäst etablerar en filial på Sri Lanka.

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3 quick questions to Cecilia Oskarsson trade commissioner of Sweden to India at Business Sweden about export opportunities to South Asia, support from Business Sweden when exporting to Sri Lanka, and best tips to Sri Lanka – for business and pleasure.

Most Swedish exports still go to countries close to Sweden. How can we get more Swedish export companies to discover South Asia and especially Sri Lanka?

Being near your own market works to a large extent as risk management – you know the culture and how to do business in the area. When you are looking to enter a market further away, you need to get the knowledge on how to act, what constitutes the legal structure, how do you conduct business and what is considered as a complete no-no there.

The Sweden-Sri Lanka Business Council is doing great work and this should be leveraged – Knowledge about Sri Lanka can be spread across by the Council to showcase good business cases. There is huge potential in showcasing the possibilities and for the Council to be a hand to hold in the learning journey. Business Sweden can extend its support for creating long-term and feasible relationships.

There are great business opportunities for Swedish companies, not least because environmental sustainability poses as one of the region’s greatest challenges, leading to a large appetite for new, sustainable innovation. And this, of course, is the hallmark of Swedish companies.

How can Business Sweden assist Swedish companies that want to export to Sri Lanka?

Our cross-cultural teams offer practical assistance and in-depth knowledge about local business conditions. Contact us today to:

Analyse Sri Lanka as your next market

Find local partners

Identify the right distribution channels

Find new customers

Look at strategies for market expansion in Sri Lanka

Accelerate your sales in Sri Lanka

Our cross-cultural teams offer practical assistance and in-depth knowledge about local business conditions. Contact us today to:

Analyse Sri Lanka as your next market

Find local partners

Identify the right distribution channels

Find new customers

Look at strategies for market expansion in Sri Lanka

Accelerate your sales in Sri Lanka

You have visited Sri Lanka several times. What are your best tips?

For Business – have people on the ground. It is imperative to partner up with the right partner. Do your homework well before entering by talking to partners who have local experience. Sri Lanka is a strategically placed island with much to offer and hence can be a lucrative partner.

Pleasure – more than 10 years ago since I was last there, but fascinating that you have everything: the beach, natural parks, hiking, and mountains. Very much looking forward to coming back very soon. Ceylon tea gives you the best start of the day!


3 quick questions to Håkan Lord, CEO of SoftOne Group, about IT development in Sri Lanka. SoftOne is a Swedish software company that offers a cloud based SaaS business system. The company was founded in 1985 by Håkan Lord, who is still the CEO. Two years ago, SoftOne acquired a company with operations in Sri Lanka. Today, SoftOne has a growing development team in Sri Lanka and is a member of the SSLBC.

What is your overall experience of working with Sri Lanka?

We soon realized what a golden nugget we had acquired. The competence of our Sri Lankan colleagues is very high. This also applies to language skills. Everyone speaks superb English. Recruitment is relatively easy, and loyalty is strong – the relationships created are long term. Multiculturalism is evident and an asset, as is the fact that the country is a democracy and has a distinct soul. It is also easy to combine business with pleasure – Sri Lanka is a great place to visit.

How do you work with the development team in Sri Lanka?

It is our tech team that is situated in Sri Lanka. The team works together with our three development teams in Sweden and Finland. This division works very well. The team in Sri Lanka does not need to have knowledge of specific domain areas such as payroll or tax. The long term ambition is to integrate our teams more. This is important so that we can constantly refine our technology.

What are the objectives for the Sri Lankan operation? We will develop it step by step. The long term ambition is to have two to three teams in Sri Lanka. We will also strengthen the integration between the operations in Sweden, Finland and in Sri Lanka. This means, among other things, that some of our Swedish developers are planning to travel to Sri Lanka this fall to work from there for a period. We are clearly on the same level and work towards common goals.