STOCKHOLM, Aug 29 (Reuters) – Sweden’s economy contracted in the second quarter, mainly due to slower exports and lower trade inventories, although the contraction was smaller than expected, data from the statistics office showed on Tuesday.
Gross domestic product (GDP) fell 0.8% from the previous three months, while last month’s flash estimate put it down 1.5% and the median estimate from a Reuters analyst poll put it down 1.3%.
Year-on-year, GDP fell 1.0%, the agency said in a statement. The provisional figure was based on a decline of 2.4%.
In previous quarters, the economy was relatively strong despite rising inflation, higher interest rates, an unstable real estate market and global uncertainties. In 2022, it grew by 2.8%.
“The second quarter of 2023 was generally weak with declines across several key components of GDP. Net exports fell, as did inventory investment,” the agency said.
“Household consumer spending was negative for the fourth quarter in a row,” it said.
The central bank raised its key interest rate from 0% to 3.75% last year. As inflation starts to slow and the economy cools, September and possibly November will see a rebound on fears that inflation will remain above target.
“The result does not change our view that the Riksbank will make two rate hikes in the autumn,” SEB analysts said in a note to clients accompanying the GDP data.
The central bank in June forecast a 0.5% decline in 2023 and announced at least one more rate hike this year.
“The sluggish growth is definitely an argument for the Riksbank to proceed with caution, but the excessive inflation and especially the weak krona mean that the Riksbank will still hike rates in September,” Nordea analysts said.
Last week the government lowered its GDP forecast for this year to a 0.8% contraction.
Reporting by Anna Ringstrom, editing by Terje Solsvik, Andrew Heavens and Ed Osmond
Our standards: The Thomson Reuters Trust Principles.
Comments are closed.