Sweden’s expansion unexpectedly accelerated in the second quarter, growing at the fastest pace since the end of 2010, as consumers in the largest Nordic economy boosted spending and exports increased.
Gross domestic product grew 1.4 percent through June, after advancing a revised 0.9 percent the previous quarter, Stockholm-based Statistics Sweden said today. Annual growth was 2.3 percent, up from 1.5 percent in the first quarter. The expansion was estimated to be 0.2 percent in the quarter and 0.6 percent in the year, according to the median estimate of 13 economists in a Bloomberg survey.
Policy makers at the Swedish Riksbank indicated in the minutes of their July 3 meeting that they’re seeking to reconcile an “unexpectedly strong development” of the local economy” with “increased concern” about the euro area. The central bank held its main rate at 1.5 percent, after two cuts since December, and signaled it may ease once again by year-end.
“We’re seeing a very strong export development, and that’s positive, but also household consumption surprises on the upside,” said Magnus Alvesson, head of economic forecasting at Swedbank AB. “We’ll see a slowdown going forward, in the autumn, as a result of the problems we’re seeing in Europe, but of course, the credibility of that forecast diminishes somewhat” after today’s report, he said.
The krona surged 0.9 percent to 8.3897 per euro and rose 0.5 percent to 6.8321 per dollar as of 10:04 a.m. in Stockholm. The yield on Sweden’s two-year notes increased three basis points to 0.91 percent.
The GDP data strengthens Swedbank’s forecast that the Riksbank will keep its key rate at 1.5 percent through the rest of the year, Alvesson said.
Household spending in the economy home to appliance maker Electrolux AB, grew an annual 0.8 percent, while exports rose 1.7 percent as imports declined 0.2 percent in the second quarter, the agency said. Investments rose 1.8 percent.
Sweden, one of only 12 nations ranked AAA at the three biggest credit rating companies, emerged as a haven from Europe’s crisis as the government cut debt and the economy in 2010 rebounded at the fastest pace in the European Union. The government this month raised its budget forecast to indicate balanced finances this year, and Finance Minister Anders Borg said the financial strength creates scope for investments that will “lay the foundations for higher growth.”
The government expects to run a balanced budget this year and a 0.4 percent surplus of GDP next year. The central bank this month raised its growth forecast for this year to 0.6 percent from 0.4 percent, and lowered next year’s estimate to 1.7 percent from 1.9 percent. The economy grew 3.9 percent last year. About 70 percent of Swedish exports are bound for Europe.
Surveys last week showed the economy was in some areas performing better than estimated. An index measuring consumer confidence rose to 5.6 in July from 3.1 the previous month, the National Institute of Economic Research said. A manufacturing confidence index improved to minus 2 from minus 5. Data from Statistics Sweden showed the number of employed rose 48,000 in June from a year earlier, pushing the seasonally adjusted unemployment rate down to 7.5 percent from 7.8 percent in May.