Sweden: GDP growth slows more than previously estimated in Q4
The economy expanded 1.1% in seasonally-adjusted quarter-on-quarter terms in the fourth quarter of 2021, easing slightly from the 1.9% rise logged in Q3 and coming in below the 1.4% estimated in the preliminary Q4 release. Meanwhile, on an annual basis, economic growth improved to 5.2% in Q4, from the previous period’s 4.2% growth. As a result, GDP rose 4.6% overall in 2021, contrasting the 3.1% contraction recorded in 2020 and marking the fastest pace of growth in over a decade.
Domestically, consumer and capital spending drove the quarter-on-quarter slowdown. Private consumption growth fell to 1.4% in Q4, marking the slowest expansion in a year (Q3: +2.5% s.a. qoq), while fixed investment contracted 0.1% in Q4, marking the weakest result since Q2 2020 (Q3: +1.2% s.a. qoq). Contrastingly, public consumption growth edged up to 0.3% in Q4, marginally above Q3’s 0.2% reading.
Meanwhile, the external sector contributed to the overall reading. Exports of goods and services growth improved to 3.4% in seasonally-adjusted quarter-on-quarter terms in the fourth quarter (Q3: +0.7% s.a. qoq), which marked the best reading since Q4 2020, while conversely, imports of goods and services growth edged down to 2.4% in Q4 (Q3: +2.5% s.a. qoq). Consequently, the external sector added 0.6 percentage points to overall growth, contrasting the 0.7 percentage point detraction recorded in Q3.
Looking ahead, the economy is set to grow at a robust pace in 2022, albeit easing from the past year’s over-decade high rate. Upbeat business sentiment and expansionary PMIs for both the manufacturing and services sectors point to solid investment at the outset of the year, while robust wage growth and a gradually falling unemployment rate should support household spending during 2022. On the other hand, elevated inflation amid high energy and fuels costs is a cause for concern, potentially eroding purchasing power and inhibiting consumer spending somewhat. Moreover, risks of an overheating housing market are rising: House prices surged at the fastest rate in over 30 years in 2021 and are set to rise at a strong rate this year as well.