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Surprise growth spurt for Sweden's economy

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Surprise growth spurt for Sweden's economy
Sweden's economy is growing faster than expected. Photo: TT
10:13 CET+01:00
Sweden's economy grew more than expected at the end of last year, with GDP rising by 1.1 percent between the third and fourth quarter, according to new figures from Statistics Sweden.
The figures also showed a strong annual rise with GDP up 2.7 percent compared with the same period in 2013. A range of economists had predicted a rise of around 2 percent.
 
GDP is one of the most important indicators used to assess the health of a nation's economy and represents the total value of goods and services produced over a set length of time.
 
The latest research from Statistics Sweden also revealed that household consumption rose by 0.9 percent compared to the previous quarter, while exports and imports to and from the Nordic nation and production of goods and services also increased over the same period.
 
Unemployment also dipped slightly with 7.8 percent of the working population currently out of a job, down 0.2 percent.
 
The new figures emerged a day after a major study for Swedish bank SEB and consulting firm Deloitte, which suggested that Sweden's economy was rising for the first time since 2011 due to the manufacturing sector "now pulling its weight".
 
"Overall, firms are more optimistic about the immediate future, but that is likely due to an adjustment to, in many respects, a new reality rather than that fundamental factors have become more positive," said Johan Lindgren, Credit Strategist at SEB. "However, CFOs [Chief Financial Officers] predict strong organic growth in 2015, which is consistent with our GDP forecast."
 
The report's authors also reported that cash flow along with increased focus on mergers and acquisitions investment and geographical expansion should lead to new hires in 2015, even though the global economy and macroeconomic conditions remain uncertain.
 
"Despite a very strong financial position, good access to funding and bright prospects, repayment of debt and focus on cost reductions still remain top priorities for financial managers at larger companies, which is somewhat surprising," said Tom Pernodd, Partner at Deloitte.
 
The positive news comes despite Sweden's Finance Minister Magdalena Andersson formally lowering her growth forecast for the country's economy last month suggesting it will expand by 2.4 percent this year and 2.7 percent in 2016.
 
Those figures contrasted with her autumn prediction of a 3.0 growth in 2015, rising to 3.2 percent the following year.
 
Danske Bank, which is one of the largest financial enterprises in the Nordic region argued in January that falling oil prices and deflation could affect Scandinavian economies which had previously managed to weather the storm of the global banking crisis, including Sweden.
 
"This does not mean that there are signs of economic crisis...but growth rates are heading towards the European average and downside risks have increased," said Steen Bocian, the lead economist who worked on the report.
 
The krona soared following the better than expected economic GDP figures reported on Friday. It gained 0.6 percent to trade at 9.3566 per euro by 11.10am in Stockholm. Against the dollar, it was 0.8 percent higher at 8.3391.
 
But the currency still remains much weaker than this time last year.
 
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