Growth in the Swedish economy continued to delay in the second quarter, suggesting that the boom had probably passed its peak. The preliminary data from the statistical office showed that GDP increased by 0.3% on a quarterly basis, which is far below the average rate of 1.2% last year and a half less than the average expectations of economists. On an annual basis the Swedish economy grows by 3.1%. Moreover, the economics growth in the first quarter was revised down from 0.5$ to 0.4% on quarter-on-quarter base.
The economy has slowed significantly since the end of last year failed to meet the expectations of the Nordea Bank for 0.5% growth, and the central bank for 0.7% increase. The main reason for the delay are exports, which lost momentum. The fixed investment also disappointed, but this seems to be temporary. The slight slowdown in household consumption was expected, but government spending turned out to be surprisingly high.
The Swedish krona benefits from the unprecedented incentives pf the central bank, which buy government bonds and lower interest rates below zero, to revive inflation. Meanwhile, the government increased spending to cope with a record influx of immigrants. Sweden may claim that has one of the most successful economic recoveries in Europe, but obviously the boom is slowing and the economy growth is delaying. The exports decreased by 0.3% in the second quarter and erased 0.1 percentage point from GDP growth. The exports of goods decreased by 1%, while exports of services grew by 1.3%. The Swedish consumer confidence declines reported in recent years and in July reached its lowest level since 2013.
The weaker than expected GDP growth is a challenge for the central bank, as it means that it is less likely inflation to rise and reach the target level of 2%. However, economists do not expect the results lead to additional measures for incentives. The Swedish economy is still doing well.
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