Swedish growth highest since 2000

Swedish GDP rose by 5.5 percent in the second quarter of 2006 compared to the same period 2005, meaning that the economy is growing faster than at any time since 2000.

Statistics Sweden’s quarterly report, which contained almost only good news from the Swedish economy, comes just over a month before the general election. Pär Nuder, Sweden’s finance minister, said the report confirms “the whole economy is growing.”

The figures beat analysts’ expectations. They had on average predicted a year-on-year increase of 4.2 percent.

The preliminary numbers show that household spending rose by 3.2 percent in the second quarter. Shop sales rose 9.1 percent, sales of cars rose 6 percent.

The seasonally adjusted growth figure compared to the first quarter 2006 was 1.4 percent.

Spending by foreign tourists in Sweden grew strongly, while Swedes’ spending outside the country was down.

Oil consumption was down, something Statistics Sweden put down to households changing heating systems from oil to electricity and pellet-fired systems.

Reduced gasoline consumption was also noted.

“Increased petrol prices and maybe even congestion charging in Stockholm have led to reduced petrol consumption,” the agency wrote in a statement. Increases in the number of people using public transportation were also noted.

Public sector spending rose by 1.3 percent, with central government spending rising by 0.6 percent and local government spending rising by 1.6 percent.

Investments (gross fixed capital formation) rose by 7.9 percent during the quarter, with investments in the construction sector rising by around 10 percent. House building continued to rise during the period, and the state’s spending on roads increasing by 50 percent.

Industry’s investments increased 8.1 percent. Central and local government investments were up by 9 percent and 4.3 percent respectively.

Exports of goods and services increased by 7.1 percent, while imports increased by 6.5 percent. Production in industry increased 6.2 percent, and the number of hours worked increased by 1.3 percent. Mining, the construction industry and the service sector all saw big increases. The number of hours worked in the public sector also rose, by 1.2 percent.

“The figures confirm that the Swedish economy is very strong,” Pär Nuder told news agency TT following the publication of the figures.

“It is particularly pleasing that the whole economy is growing, including domestic consumption, investments and exports. This makes Sweden less vulnerable than if we had had export-led growth.”

“We are beating the Euroland countries by big margins,” he said.

Nuder denied that there was a risk that the Swedish economy would overheat.

“The Swedish economy can tolerate higher levels of activity than before. We have gone from being a high-inflation economy to being a low-inflation economy.”

He also denied that the government had followed an expansive economic and monetary policy this year because of the election.

“We follow economic policies in a planned way based on current conditions,” he said.