- Weak exports reduced headline number by 0.1 percentage point
- Nordea says Riksbank inflation goal may be harder to reach
Swedish economic growth continued to slow in the second quarter, adding to evidence that the country’s output boom may have peaked.
Preliminary data from Statistics Sweden on Friday showed gross domestic product grew a quarterly 0.3 percent in the three months through June, well below last year’s average of 1.2 percent and just half the estimate in a Bloomberg survey of economists. Growth in the first quarter was revised down to 0.4 percent from 0.5 percent. The annual expansion rate in the second quarter was 3.1 percent.
The economy has “slowed markedly” since last year and, besides missing Nordea’s 0.5 percent estimate for last quarter, was also well below the Riksbank’s 0.7 percent forecast, Torbjoern Isaksson, an analyst at Nordea Bank AB, said in an e-mail.
“The main reason for the slowdown” is exports, which have “lost momentum,” he said. “Fixed investments disappointed too, but that seems to be of a more temporary nature.” The slight slowdown in household spending was expected, while government expenditure was surprisingly big, according to Isaksson.
The krona slipped 0.1 percent and traded at 9.5815 against the euro as of 10:31 a.m. in Stockholm.
Sweden’s economy has benefited from unprecedented stimulus from the central bank, which has bought government bonds and cut interest rates below zero to revive inflation. Meanwhile, the government has raised spending to deal with record numbers of asylum seekers. While Sweden can claim to be a European success stories, with one of the region’s highest economic growth rates, its boom now looks set to fade.
Exports were 0.3 percent lower in the second quarter compared with the first, shaving 0.1 percentage point off GDP growth, the office said. Exports of goods fell 1 percent while sales of Swedish services abroad rose 1.3 percent.
Consumer confidence has been on a declining path and in July reached its lowest level since mid-2013. Swedes have also started taking a bleaker view of the outlook for the housing market as mortgage rules grow stricter in an effort to fight overheating. Household borrowing and home-price data also suggest the housing market may have turned.
“Weaker than expected GDP growth is a challenge for the Riksbank, as it makes it less likely that inflation will rise” and reach the bank’s 2 percent target, Isaksson said. “However, we don’t expect it to trigger any further stimulus measures.” The upshot remains that Sweden’s domestic economy “is still doing fine,” he said.