Swedish growth slows at start of 2017 as exporters struggle

Bloomberg

Sweden’s economy slowed at the start of the year as exports struggled to maintain momentum, dulling a housing-fueled investment and consumption boom in the largest Nordic economy. Gross domestic product grew 0.4 percent in the first quarter and expanded an annual 2.2 percent, Statistics Sweden said on Tuesday. Analysts surveyed by Bloomberg estimated growth of 0.9 percent and 2.9 percent, respectively. Growth in the fourth quarter was revised lower to 0.7 percent from an initial estimate of 1 percent.
The “main surprise compared to our forecast was lower net exports and government consumption,” said Andreas Wallstrom, an analyst at Nordea Bank, in a note. “Still no big deal for monetary policy as the overall picture of a strong economy remains intact.” Sweden’s $500 billion economy has been outpacing much of the rest of Europe for the past two years, helped in part by spending to absorb a record inflow of migrants. The central bank has stoked private consumption and investments by cutting interest rates deep below zero and pumping money into the economy by buying bonds in its efforts to spark inflation.
The krona slid 0.3 percent to 9.75 per euro as of 10:06 a.m. in Stockholm. Tuesday’s report showed exports fell 0.2 percent in the first quarter, dragged down by services, while imports surged 0.9 percent, subtracting from growth. Public spending slid 0.2 percent. On the plus side, investments jumped 2.5 percent and household consumption rose 0.5 percent.
The decline in public support for the economy comes as the Social Democrat-led government, which is facing an election next year, is planning to tap widening surpluses to raise spending on police, health care and education.