'Biggest GDP drop in Swedish history'

Sweden’s GDP took a historic dive in the first quarter of 2009, plummeting by 6.5 percent, according to new statistics.

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“This is the largest drop in Swedish economic history, but in line with expectation,” Henrik Mitelman, head analyst with SEB Merchant Banking, told the TT news agency.

In its March forecast, Sweden’s National Institute of Economic Research (Konjunkturinstitutet – KI) projected the economy would shrink by about 6 percent during the first quarter of this year.

But the fresh numbers from Statistics Sweden (SCB) indicate that Sweden’s economy is far from healthy.

While first quarter GDP fell by 6.5 percent compared with 2008, industrial production was down 9.0 percent, with the manufacturing sector suffering a 24.3 percent drop in production.

Gross fixed capital formation was also down by 14.3 percent, and overall employment, measured by hours worked, fell by 1.5 percent.

“But what’s interesting is that productivity has also collapsed. We’re working 1.5 percent less than last year and producing 6.5 percent fewer goods and services. That’s not an especially good development,” said Mitelman.

Trade figures also reflected the effects of the continued economic slowdown in Sweden and the rest of the world with exports falling by 16.2 percent, while imports were down by 14.8 percent.

One potentially bright are figures showing that, compared with the fourth quarter of 2008, the Swedish economy only shrunk by 0.9 percent, taking into account seasonal adjustments.

The decline is substantially less than the 5.0 percent drop which occurred between the third and fourth quarters of 2008.

“That indicates that the fall in GDP is starting to slow down, and that we are possibly on our way towards a stabilization,” said the head of KI, Mats Dillén, to TT.