Sweden’s GDP up 3.5 percent

Swedish authorities issued a downward revision Tuesday to their growth estimate for the second quarter, when the economy is now seen to have expanded 0.9 percent over three months rather than 1.0 percent.

However the outlook remains rosy, as compared to the first quarter the economy continued to expand. First quarter growth came to 0.6 percent from the the previous three months.

The Swedish statistics office (SCB) said the growth was driven by unadjusted capital investments, which increased by 9.8 percent, and household consumption which grew by 2.7 percent.

The SCB also said that compared with the second quarter of 2006 growth came to 3.5 percent in the April-June period this year, against 3.0 percent in the first quarter.

Public spending increased by 1.9 percent, while exports grew by 5.5 percent and imports by 7.5 percent.

“The figures are almost the same as the preliminary outcome. It’s a small disappointment though I was looking for a small upward revision,” Håkan Frisén, chief economist at the Swedish bank SEB said.

“Looking at the big picture the Swedish economy continues to grow quite rapidly, although somewhat slower compared to 2006,” he said, adding: “We can already see some impact from the slowdown in the US economy in export figures”.

Alexis Garatti, an economist with Ixis asset management said that while in the past growth in the economy had been underpinned by exports, momentum was now down to internal demand.

He said that Sweden was now a special case in Europe, with strong growth and optimstic forecasts.

Earlier in September Sweden’s central bank raised its key interest rate to counter inflationary pressures, despite concern about the impact of the US housing crisis that has shaken financial markets.

Garatti warned that in the medium term Sweden was vulnerable to the turmoil in the world economy.

Economists forecast growth of between 3.4 percent and 3.5 percent for 2007, against 4.2 percent in 2006 and 2.9 percent in 2005.