Swedish GDP growing faster than expected

Sweden's second quarter GDP growth was even greater previously reported, according to revised figures from Statistics Sweden (SCB).

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Sweden’s economy grew by 4.6 percent in the second quarter compared to the previous year, SCB reported on Wednesday, beating even the most optimistic projections by Sweden’s large banks.

“We thought there would be an upward revision, but not that it would be this much,” Olle Holmgren, an economist with SEB bank, told the TT news agency.

Previous figures had put GDP growth for the second quarter at 3.7 percent.

The restocking of inventories added about 2.6 percent to Sweden’s GDP growth figures, according to SCB, constituting one of the primary reasons for the upward trend.

“Looking forward a bit, things continue to look good for the third quarter. Based on that, it’s plausible that we’re going to see a real upward bounce in GDP this year, which will recover a large part of the fall in 2009,” he told TT.

Seasonally adjusted GDP increased by 1.9 percent compared with the first quarter of 2010, with household consumption rising by 2.4 percent and government spending up by 3.4 percent, according to SCB.

International trade also picked up, with exports rising by 13 percent and imports by 18 percent, while industrial production jumped up by 6.6 percent.

SCB’s numbers also showed that total employment, as measured as the number of hours worked, increased by 2.1 percent while the numbered of people employed increased by 0.8 percent.

According to Holmgren, SEB may revise its growth forecast in light of the new statistics, but added that the effect of inventories was likely temporary.

Nevertheless, Holmgren emphasized that demand remains strong.

“We can’t expect to have growth close to 5 percent for very long, but if you look at demand, we’re coming back on a broad front,” he told TT.

Holmgren also speculated that if uncertainties about the global economy blow over, the Riksbank may increase the pace at which it raises the repo rate.