Seasonally adjusted GDP increased by 1.2 percent compared with the first quarter. Sweden’s central bank, the Riksbank, had earlier estimated GDP would come in at 3.2 percent.
Analysts on average had expected a gain of 3.3 percent, according to a Reuters poll. However, several analysts had revised their expectations after the agency reported strong Swedish trade balance figures on Monday.
Sweden’s GDP in the first quarter grew by 3 percent annually and 1.5 percent compared to the prior quarter, according to revised figures. The SCB had previously reported growth of 1.4 percent on a quarterly basis for the first quarter.
The krona did not move significantly, while the market edged up slightly immediately after the publication of the figures.
At 2:30pm Swedish local time, US GDP figures will also be released, where growth is expected have registered at 2.5 percent annually in the second quarter, representing a slowdown from the first quarter’s 2.7 percent.
Sweden’s economy has grown thanks to unexpectedly strong GDP growth with each consecutive quarter since the second quarter of 2009. According to SCB, household consumption increased by 2.6 percent in the second quarter. Of particular interest to SCB was a boost in automobile purchases, while food consumption proved to be a fork in the road.
The lift was also measured in the form of more hours worked in the economy. The number of hours worked increased by 0.6 percent and the number of employed rose 0.4 percent. Exports and imports increased by 14 and 18 percent respectively during the quarter, resulting in net export contributing 0.6 percentage points to GDP growth.
“The strong GDP figure was pretty expected,” said Olle Holmgren, macroanalyst at SEB. “There was great uncertainty about how strong it would be. We see broad growth. The investments are attractive and the strong increase in exports are at levels not seen since 1994.”
He expected the Riksbank to continue to raise interest rates this fall.
“These figures provide support for what the Riksbank flagged for, that there will more interest rate increases in the fall,” said Holmgren.
Torbjörn Isaksson, macro analyst at Nordea, does not think the Riksbank will change its attitude and raise the levels of interest rate increases because of the rapid growth of the economy.
“It depends on the threatening storm clouds, with debt crises in southern Europe and weak statistics from the US recently,” he said.
RBS analyst Filip Andersson sees an imminently large risk that the Riksbank will do an about-face.
“We are very worried about the outlook,” he said. “If it starts to go downwards in Europe and the US, it will do so in Sweden too. And it can change very quickly. With a deeper crisis in the euro zone, the repo rate will fall again rather quickly.”
Friday’s GDP figure also conceals a large stockpiling effect. The stockpiles are unexpectedly full, which could backfire in the future, added Andersson. According to the SCB, 2 percent of the GDP growth pays for the stockpiling effects.
“It is not entirely positive. If you build up stockpiles, future production will presumably be a bit lower,” he said.
He recalled at the same time that while the average forecast on the market was 3.3 percent in growth, it did not correspond with the expectations that the market actually had. The poll was conducted right before the release and reports about the changing situation.
“There was new positive data this week, with the balance of trade and National Institute of Economic Research’s (Konjunkturinstitutet, KI) indicators,” he said. “The expectations were probably a bit higher than what the forecasts showed.”