Sweden’s economic growth accelerates

Bloomberg

Sweden’s economic growth unexpectedly accelerated in the second quarter as consumer spending and exports picked up.
Gross domestic product advanced 1.0 percent in the period, accelerating from a revised 0.8 percent in the first three months of 2018 and beating the 0.5 percent estimate in a Bloomberg survey of economists. GDP grew 3.3 percent from a year earlier. The krona climbed 0.6 percent to 10.24 per euro as of 10:01 a.m.
The largest Nordic economy has now seen 20 consecutive quarters of growth, which in part has been fueled by a record wave of immigration since 2015. It has driven employment to a record high level and public debt to the lowest since 1977. Consumers have so far withstood a slide in the housing market even as confidence has waned some this year.
“This was a surprisingly good figure,” said Olle Holmgren, an analyst at SEB AB. “If we look at the underlying drivers we see that exports are doing really well and consumption is continuing to stay strong. But we remain cautious in our interpretation of a single quarter.”
Interest rates are at rock-bottom, but the Swedish central bank has flagged it will start raising rates from a record low of minus 0.5 percent toward the end of the year after unleashing record stimulus over the past four years to stabilize inflation.
Consumer spending rose 0.9 percent in the quarter while investments fell 0.2 percent, according to Statistics Sweden. Exports increased 0.5 percent while imports slid 0.1 percent.
“The Riksbank have been very clear that they are focusing on inflation, but on the margin this could increase probability for a rate hike,” said Holmgren. “But we don’t see reason to to change our forecast due to this. We still believe in a first rate hike in April next year.”