Sweden: Economy shrinks in Q2
July 30, 2013
In the second quarter, GDP decreased 0.1% over the previous quarter in seasonally and working-day adjusted terms, which contrasted the 0.6% increase registered in the first quarter. The reading undershot market expectations that GDP would edge up 0.1%. On an annual basis, the economy grew 0.6% in the second quarter, which was below the 1.6% rise seen in the first.
Deterioration in domestic demand was the main driver of the contraction in Q2. Private consumption saw the sharpest decrease since Q3 2011, swinging from a 0.9% expansion in the first quarter to a 0.1% contraction in the second. Conversely, government consumption increased 0.2% (Q1 2013: +0.1% quarter-on-quarter). Fixed investment increased 0.1% in the quarter, contrasting the decrease of 2.4% recorded in Q1.
Exports of goods and services fell 0.8% in Q2 (Q1: -1.5% qoq) and imports declined 0.6% (Q1: -1.6% qoq). As a result of the across-the-board contraction, the external sector's net contribution to overall economic growth remained at minus 0.1 percentage points.
According to its July Monetary Policy Update, the Central Bank expects economic growth to reach 1.5% in 2013 before accelerating to a 2.8% in 2014. FocusEconomics Consensus Forecast panellists 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 the economy will expand 2.4%.
Author: Dirina Mançellari, Senior Economist