Sweden’s GDP continues growth in second quarter

Sweden's GDP continued its strong development in many areas in the second quarter, rising 4.6 percent in seasonally adjusted figures compared to the same quarter last year, Statistics Sweden (SCB) reported on Wednesday.

The figure represents the highest growth rate increase since the second quarter of 2000. The upturn is mainly a result of the strong growth in business, where demand has accelerated considerably since the financial crisis.

In calendar-adjusted figures, GDP rose by 1.9 percent compared to the previous quarter. Non-adjusted GDP growth amounted to 5.2 percent compared to last year, with inventory changes accounting for half of this figure, 2.6 percentage points.

Household consumption increased by 2.6 percent compared with last year thanks to income growth, low interest rates and increased unemployment. Demand for durable goods increased, mainly automobiles and home electronics. The lower savings ratio is an indicator that part of household consumption is financed through reduced savings.

Despite having been the engine for earlier changes, net exports did not figure in the upturn. The contributions to GDP growth from net exports have been negative figures for the last four quarters.

The upturn was a result of a wider purview of the economy, with strong growth in consumption and investment. Labour market development was especially strong, but the normal pattern of production and employment appears to be broken. Production and employment now largely increase at similar rates.

Both imports and exports had positive development, while net exports held back GDP growth. Although exports increased strongly, imports increased even more. High import volumes are contributing to the areas of the economy that are growing fastest, including household consumption and export goods.

As was the case with the first quarter, demand for goods increased, while trade in services only rose marginally. Countries that were harshly affected by the financial crisis have now slowly begun recovering, resulting in an increased demand for Swedish goods.

Labour market conditions continued to improve.

For the first time in this business cycle upturn, increased employment and decreased unemployment were noted for both men and women. The number of hours worked increased considerably more than the number of employed persons, implying a certain degree of caution for recruiting new employees.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.


Swedish economy continues to sputter

Swedish economic growth failed to meet expectations in the third quarter of 2013, reaching a meager 0.1 percent compared to the previous quarter, new figures reveal. But the possible effects on the repo rate remain unclear.

Swedish economy continues to sputter

Analysts surveyed by Dow Jones Newswires had forecast quarterly GDP growth of 0.2 percent, while Reuters' survey revealed analysts expected growth of 0.5 percent.

Compared to the third quarter of 2012, the Swedish economy expanded by 0.3 percent, below the 0.4 percent forecast by analysts surveyed by Reuters.

While consumer spending increased by 2.1 percent, and government spending rose by 1.9 percent, growth figures were dragged down by inventory reductions, which fell by 1.6 percent.

Exports were also down by 1.6 percent, while imports dropped by 2.2 percent.

The figures released by Statistics Sweden on Friday did include some reason for hope however, as the agency upwardly revised its previous figures for economic growth by 0.5 percent in the second quarter and 0.3 percent in the first quarter.

Despite the less-than stellar growth statistics, economists in Sweden said the details of the report were more encouraging than the headline figure.

"Aspects of the GDP indicate a healthy evolution of the internal economy," Nordea economist Annika Winsth wrote on Twitter.

Speaking with the TT news agency, she called the figures "okay", saying they likely mean Sweden's central bank will leave Sweden's benchmark interest rate, the repo rate, unchanged when it convenes again in December.

However, SEB economist Olle Holmgren said economic stagnation and low inflation meant the Riksbank would likely cut rates from today's 1 percent to 0.75 percent.