Sweden’s forestry industry has entered its sharpest downturn in more than five years, with confidence in the sector sliding to its lowest level since the pandemic as global demand falters and trade barriers bite.
The forestry subindex of the Green Business Index, published by the Federation of Swedish Farmers (LRF), fell 19 points in the fourth quarter to 97.6 — its weakest reading since spring 2020 — underscoring mounting pressures across Sweden’s supply chain, from sawmills and pulp producers to landowners.
Wood Central understands that weaker export demand, falling prices for sawn wood and pulp, and a soft U.S. dollar have eroded revenues. New tariffs on Swedish wood products bound for the United States, coupled with a slowing global economy, have further squeezed profitability.
“Forestry companies are facing a challenging situation with high costs and low demand hitting sawmills, pulp and paper producers hard,” the Swedish Forest Industries Federation said.
Signs of contraction are already visible in the forests.
New data show that the area registered for final felling fell by 8 per cent in September and 4 per cent in October compared to the same time last year. LRF attributed the decline partly to uncertainty about new restrictions on forest use, which has dampened landowners’ confidence. The Green Business Index, which tracks sentiment across Sweden’s agricultural industries, also weakened, slipping to 100.7 from 106.5 in the previous quarter. Whilst crop farming showed signs of strain, forestry recorded the sharpest fall.
Forestry remains a cornerstone of Sweden’s economy, covering nearly 70 per cent of the country’s land and employing more than 100,000 people. But with confidence now at its lowest in five years, industry leaders warn that without policy stability and improved market conditions, forest owners may continue to scale back operations. “Increased trade barriers are creating uncertainty for the industry,” the Forest Industries Federation said, adding that profitability has been squeezed across the supply chain.
- To learn more about the role that Sweden’s timber giants are playing in driving up the cost of forestland in the Baltics, click here for Wood Central’s special feature earlier this year.
