- Strong growth damps likelihood of Riksbank easing: Nordea
- Krona strength may be Catch-22 for central bank, Danske says
Sweden’s economy grew twice as fast as economists had predicted as exports and consumer spending gained, easing pressure on the central bank to deliver more stimulus.
The economy expanded 0.8 percent in the third quarter, Statistics Sweden said in a statement. Growth was seen at 0.4 percent in a Bloomberg survey of analysts. It grew an annual 3.9 percent, compared with the 3.4 percent estimate. The krona jumped as much as 0.4 percent to 9.216 per euro.
“This shows broad and high growth in the Swedish economy and the development is stronger than the Riksbank had in its forecast,” Andreas Wallstroem, an analyst at Nordea, said by phone. “This clearly reduces the likelihood of the Riksbank easing monetary policy further, but we can’t say that it closes the door -- the market effects of what the ECB does on Thursday will be crucial.”
Sweden’s central bank has cut its benchmark rate to an unprecedented minus 0.35 percent and embarked on a government bond purchasing program to revive inflation in the largest Nordic economy.
The strong economy means the bank won’t automatically cut rates at its meeting next month even if the European Central Bank delivers more stimulus this week, Riksbank Deputy Governor Cecilia Skingsley said last week.
Fixed investment rose 1.2 percent from the second quarter, while exports gained 2.1 percent and imports rose 2.1 percent. Private spending growth was 0.7 percent.
Swedish inflation is struggling to pick up as ECB easing is strengthening the krona against the euro. Consumer prices rose just an annual 0.1 percent last month.
“There’s a bit of a Goldilocks feeling over the development in the Swedish economy, with low inflation and strong growth, which really surpasses expectations this quarter,” Michael Grahn, an analyst st Danske Bank, said by phone.
Whether the Riksbank will ease more in December depends on how the trade-weighted krona develops compared with the central bank’s forecast, according to Grahn.
“There’s almost a Catch-22 with the currency, where good numbers for Sweden and ECB action may lead to a stronger currency, which they’ve shown that they may act on,” Grahn said.