Swedish economy shrinks in Q2 in blow to Riksbank

Bloomberg

Sweden’s economy unexpectedly shrank in the second quarter, casting further doubts on the Riksbank’s plans to continue to raise rates.
Gross domestic product contracted 0.1 percent in the second quarter from the first, according to preliminary numbers from Statistics Sweden. Economists had predicted an expansion of 0.3 percent. Annual growth was 1.4 percent while economists and the
Riksbank had predicted an expansion of 1.9 percent and 1.8 percent, respectively.
According to Statistics Sweden, the quarterly contraction was mainly caused by gross fixed capital formation, which decreased by 1.1 percent.
Exports and imports decreased by 0.3 percent and 0.5 percent, respectively, while household consumption grew by 0.6 percent.
The data, which was released early as a result of a mistake
at the statistics agency, comes after first-quarter numbers showed that the economy expanded three times faster than estimated at the beginning of the year.
The Riksbank said it still expects to hike rates towards the end of this year or early next year, though many economists doubt it will be able to do so given a slowing economy. Minutes from the meeting also showed that policy makers are growing increasingly uncertain about the planned hike as the world’s major central banks prepare to add more stimulus and growth cools.
The preliminary second-quarter GDP data is published by Statistics Sweden to provide the government with figures for its autumn budget work.
Swedbank said the largest negative contribution came from fixed investment and that exports, import growth and public consumption were also weaker than it had expected.