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Sweden's GDP growth at post-war low

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10:18 CET+01:00
Sweden's GDP declined by 1.5 percent in the fourth quarter, making 2009 the worst year for growth since World War Two, according to a new report from Statistics Sweden (SCB).

Sweden's GDP fell by 4.9 percent for the full year 2009 in comparison with 2008.

The development in the fourth quarter was significantly below expectations with a Reuters survey of analysts forecasting a drop of only 0.1 percent in the period.

Household consumption increased by 1.8 percent, while general government consumption expenditure climbed by 2.1 percent.

"A weak figure. But I do not think that it changes the picture in any dramatic way. It is primarily inventories and investments that have been surprisingly negative," said Henrik Mitelman at SEB Merchant Banking.

Mitelman forecast that the tide would turn for Swedish GDP in the first or second quarter 2010.

Both exports and imports decreased by 5.7 percent while industrial production decreased by 2.3 percent. Total goods production decreased by 6 percent and service sector industries by 0.1 percent, the SCB statistics show.

Total employment, measured as the number of hours worked, decreased by 2,4 percent while the numbers of employed decreased by 2.1 percent.

Stefan Hörnell at Handelsbanken also expressed surprise over the report.

"The figures are weaker than we had expected, especially private consumption," he said.

Hörnell added that the figures could impact Riksbanken's base interest rate policy.

"It's becoming likely that the interest rate rise will happen later than July, that it perhaps will happen in the autumn instead."

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