Sweden’s economy will grow more this year than previously forecast as consumers spend at the fastest pace since 2010, according to Nordea Bank AB.
Gross domestic product in the largest Nordic economy will expand 1.5 percent in 2013, compared with a March estimate for 1.3 percent, Stockholm-based Nordea said in a report today. The rate of expansion will reach 2.5 percent in 2014, the bank said. Swedish GDP grew 0.7 percent last year.
“The Swedish economy is emerging from the soft patch that it has been in for the past year or so,” Nordea said in a report. “Consumer spending is the key driver.”
The Riksbank has signaled its next monetary policy step will be to raise rates in the second half of next year. The bank, which kept its benchmark repo rate at 1 percent for a second meeting in April, says its policy is designed to keep credit growth in check even as inflation hovers well below its 2 percent target.
“The central bank argues that its monetary policy line is already expansionary,” Nordea said. “Further rate cuts are therefore not likely.”
Sweden’s economic strength means the krona is likely to gain against the euro, according to Scandinavia’s biggest bank.
“A continued comparatively healthy economic performance by Sweden speaks in favor of the krona maintaining its strength against the euro,” Nordea said. “The deviation of the real exchange rate from its long-term average indicates continued krona appreciation. By contrast, the krona is set to weaken slightly versus the dollar in step with the recovery of the U.S. economy.”
Growth in mainland GDP in neighboring Norway -- a measure that adjusts for income from oil and shipping -- will slow to 2.6 percent this year from 3.4 percent in 2012, Nordea said. A slowdown in consumer spending and business investment, as well as a decline in exports, will weigh on growth, the bank said.
Denmark’s economy will return to growth this year, expanding 0.3 percent after contracting 0.5 percent in 2012, Nordea estimates. Finnish output will continue to shrink in 2013, declining 0.5 percent after contracting 0.2 percent in 2012, the bank said.