- Consumer spending growth accelerates to 0.9% in quarter
- Swedish exports advance most in at least seven quarters
Sweden’s economy expanded faster than estimated in the fourth quarter after the central bank unleashed record stimulus to defend the credibility of its inflation target.
The economy surged 1.3 percent from the third quarter, Statistics Sweden said in a statement. Growth was seen at 0.7 percent in a Bloomberg survey of analysts. It expanded an annual 4.5 percent, compared with a 3.6 percent estimate.
Growth was “super strong and the upturn was broad-based,” said Magnus Alvesson, head of forecasting at Swedbank AB in Stockholm. “This increases the likelihood that the Riksbank won’t have to do more” as “this is a signal that the domestic price pressure in Sweden may start to rise,” he said.
The nation’s central bank has cut interest rates deep below zero and unleashed a bond purchase program to provide further stimulus as it struggles to meet its 2 percent inflation target. Efforts to accommodate a record-wave of immigrants from war torn countries such as Syria and Iraq is also fueling public spending and growth.
Fixed investment rose 2 percent from the third quarter, while exports increased 2.9 percent and imports rose 2 percent. Private spending and public spending both accelerated to 0.9 percent.
“Everything looks very good,” Roger Josefsson, chief economist at Danske Bank. “It’s a strong number and it’s welcome that exports were so strong as exports have been missing in the economic recovery since the financial crisis.”
Growth almost doubled to 4.1 percent last year from 2.3 percent the previous year. The central bank has come under increased criticism they risk overheating the economy amid falling unemployment and surging house prices.
Even so, there are now signs the housing market is cooling and inflation has also started to pick with consumer prices climbing 1.6 percent last month. Apartment prices were unchanged in the three months through January.
According to Andreas Wallstroem, chief analyst at Nordea Bank in Stockholm, minutes from the central bank’s policy meeting this month showed that policy makers have started to look more at GDP readings when setting policy rather than just inflation.
The Riksbank has said it’s also prepared to intervene in the krona as as unprecedented stimulus from the European Central Bank has put upward pressure on the krona. The krona jumped as much as 0.5 percent against the euro following today’s GDP reading. It traded at 9.3199 per euro as of 11:11 a.m. in Stockholm.
The strong 4Q reading is not a “game changer for the krona,” said Claes Maahlen, at Svenska Handelsbanken in Stockholm. “You probably shouldn’t draw any conclusions about the Riksbank with these numbers as a starting point” since any policy changes next month from the ECB will be more important for Riksbank policy, he said.