Sweden: Economy contracts in Q2
September 13, 2013
In the second quarter, GDP shrank 0.2% over the previous quarter in seasonally and working-day adjusted terms, according to detailed data released on 13 September. The figure exceeded the 0.1% contraction reported in the preliminary estimate on 30 July and contrasted the 0.3% expansion recorded in the first quarter. The decline undershot market expectations that expected GDP to contract 0.1%. On an annual basis, the economy grew 0.1% (previously reported: +0.6% year-on-year) marking a deterioration over the 1.3% expansion in Q1.
The contraction in Q2 was due to a slowdown in domestic demand and a deterioration of the external sector. Private consumption expanded 0.2% in Q2 (previously reported: -0.1% quarter-on-quarter), down from the 0.7% expansion recorded in Q1. Government consumption grew at 0.3% (previously reported: +0.2% qoq), the same rate as recorded in Q1. Conversely, fixed investment improved from a 3.1% contraction in Q1 to a zero growth rate in Q2 (previously reported: +0.1% qoq).
Exports of goods and services fell 0.9% in Q2 (previously reported: -0.8% qoq) and imports declined 0.2% (previously reported: -0.6% qoq). As a result, the external sector's net contribution to overall economic growth deteriorated from zero percentage points in Q1 to minus 0.3 percentage points in Q2.
According to its September Monetary Policy Update, the Central Bank expects economic growth to reach 1.5% in 2013 before accelerating to 2.8% in 2014. FocusEconomics Consensus Forecast panelists are slightly less optimistic than the Central Bank and expect the economy to grow 1.3% in 2013, which is unchanged from last month's estimate. For 2014, the panel projects that the economy will expand 2.4%.
Author: Dirina Mançellari, Senior Economist