Sweden's GDP continues growth in second quarter

Sweden's GDP continued its strong development in many areas in the second quarter, rising 4.6 percent in seasonally adjusted figures compared to the same quarter last year, Statistics Sweden (SCB) reported on Wednesday.

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The figure represents the highest growth rate increase since the second quarter of 2000. The upturn is mainly a result of the strong growth in business, where demand has accelerated considerably since the financial crisis.

In calendar-adjusted figures, GDP rose by 1.9 percent compared to the previous quarter. Non-adjusted GDP growth amounted to 5.2 percent compared to last year, with inventory changes accounting for half of this figure, 2.6 percentage points.

Household consumption increased by 2.6 percent compared with last year thanks to income growth, low interest rates and increased unemployment. Demand for durable goods increased, mainly automobiles and home electronics. The lower savings ratio is an indicator that part of household consumption is financed through reduced savings.

Despite having been the engine for earlier changes, net exports did not figure in the upturn. The contributions to GDP growth from net exports have been negative figures for the last four quarters.

The upturn was a result of a wider purview of the economy, with strong growth in consumption and investment. Labour market development was especially strong, but the normal pattern of production and employment appears to be broken. Production and employment now largely increase at similar rates.

Both imports and exports had positive development, while net exports held back GDP growth. Although exports increased strongly, imports increased even more. High import volumes are contributing to the areas of the economy that are growing fastest, including household consumption and export goods.

As was the case with the first quarter, demand for goods increased, while trade in services only rose marginally. Countries that were harshly affected by the financial crisis have now slowly begun recovering, resulting in an increased demand for Swedish goods.

Labour market conditions continued to improve.

For the first time in this business cycle upturn, increased employment and decreased unemployment were noted for both men and women. The number of hours worked increased considerably more than the number of employed persons, implying a certain degree of caution for recruiting new employees.