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Sweden GDP Q1 2024

Sweden: Economy disappoints in Q1 and contracts for a fourth consecutive quarter

The Swedish economy notably undershot market expectations and contracted for a fourth consecutive quarter in the first three months of 2024. According to preliminary figures from Statistics Sweden, GDP contracted 0.1% in seasonally adjusted quarter-on-quarter terms, a milder decline than Q4 2023’s 0.2% and missing analysts’ expectations of a shallow expansion.

Meanwhile, in annual terms, GDP also contracted for a fourth running quarter and posted a 1.2% fall, deteriorating from the prior period’s 0.2% year-on-year decline.

While details of the release are still pending, downbeat consumer spending was likely behind the downturn. It contracted 0.3% over the quarter as a whole (Q4: +0.4% s.a. qoq), with a rise in March more than offset by falls in both in January and February—dampened by above-target inflation and still-elevated interest rates. In addition, retail sales roughly stagnated over Q1, contracting in March after posting shallow expansions in January and February.

Our Consensus expects the economy to exit recession and expand in sequential terms in Q2, before accelerating further in H2. The beginning of the Riksbank’s loosening cycle will provide financial support to highly indebted households. This will spur private consumption and thus economic activity this year, along with the expected recovery in purchasing power taking hold as nominal wage growth surpasses inflation.

A more comprehensive breakdown of national accounts data for Q1 will be released on 30 May.

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