Sweden’s Recovery Backed by Robust Household Demand, EU Says

Sweden’s economy will expand this year amid robust household demand, the European Union said.

The largest Nordic economy will grow 1.5 percent in 2013 and 2.5 percent in 2014, the European Commission said today in new forecasts.

“Household consumption is likely to be the most important source of growth in 2013,” the commission said. “Households are becoming more optimistic, encouraged by stable house prices, decreasing interest rates and the rise in the stock market.”

The Swedish central bank last month pushed back plans to increase its main lending rate, in part as a strengthening krona has reduced inflation. The Riksbank predicts it won’t increase its rate from 1 percent repo until late next year.

The EU also forecast today that Denmark’s gross domestic product will grow 0.7 percent this year and 1.7 percent next year, also boosted by domestic demand. Finland, the only Nordic country with the euro, will expand 0.3 percent in 2013 and 1 percent in 2014, the EU said.

Iceland, which has frozen talks on joining the EU, will grow 1.8 percent this year and 3 percent next year, the commission said.