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Swedish economy continues to sputter

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Swedish economy continues to sputter
14:12 CET+01:00
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.

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.

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