Swedish economy growing again: report
TT/The Local · 29 Jul 2009, 15:15
Published: 29 Jul 2009 15:15 GMT+02:00
The report's optimistic forecast sticks out among market commentators, who generally expect further GDP falls this year.
According to Nordea economists Sweden's GDP climbed by 0.3 percent during the second quarter in comparison with the first.
The bank's forecasters therefore warn of the need to raise the benchmark interest rate (repo rate) "significantly earlier" than the turn of the year 2011, which is the latest indication from Riksbanken.
Key factors behind the turn in the country's economic fortunes are concluded to be stronger private consumption and a more stable trade balance, Nordea argues.
"Tax cuts, low interest rates and climbing stock markets stimulate consumption," Nordea writes.
But even if the economic nadir has passed for this recession, 2009 is set to go down as one of the weakest years for growth in living memory.
On an annualized basis Nordea calculates that the recession has negatively impacted Swedish GDP by 5.7 percent.
Nordea's forecast is more positive than its finance sector colleagues, according to a survey by news agency Reuters.
The average forecast for the second quarter indicates a GDP decline of 0.4 percent on a quarterly basis and down 6.6 percent year-on-year.
This would mean that the record 6.5 percent annualized fall in the first quarter would be exceeded.
According to Olle Holmgren at Swedish bank SEB, talking to Reuters, GDP is still been hit by weak exports and lower levels of investment.
Riksbanken, which in July cut base rates to a record low 0.25 percent to stimulate growth, expects GDP for 2009 to be 5.4 percent lower that 2008 and will be followed by weak growth in 2010.