Sweden's economy unexpectedly shrinks in second quarter
Sweden's economy saw an unexpected contraction in the second quarter of 2019 compared to the same quarter last year, preliminary data shows.
Net exports were weaker than expected, and there was a greater drop in investments than most experts had forecast.
GDP fell by 0.1 percent during the second quarter compared with 2018, according to the figures from Statistics Sweden released on Tuesday. Meanwhile, annual growth was just 1.4 percent, compared to the Riksbank's prediction of 1.8 percent growth.
The kronor lost around five ore against both the dollar and the euro, the impact of which could be seen in high numbers of Swedish residents choosing to stay at home during the summer holiday season rather than travel overseas.
And market interest rates are falling, with interest on a ten-year Swedish government bond at a record low of -0.1 percent.
"The hope that we would see decent growth this year was based on the second quarter being good," said Olle Holmgren, an economist at bank SEB.
The Riksbank had projected growth of 0.1 percent against the first quarter and 1.8 per cent year-on-year. Nordea's economists had a forecast of 0.2 percent and 1.9 percent, respectively, while SEB's forecasts were 0.4 percent and 2.1 percent respectively.
"It looks quite weak going forward. This is a worrying sign for the Swedish economy. It confirms that growth is slowing down," said Holmgren, adding: "It's happening a bit faster and a bit more steeply than we had expected."
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Net exports were weaker than expected, and there was a greater drop in investments than most experts had forecast.
GDP fell by 0.1 percent during the second quarter compared with 2018, according to the figures from Statistics Sweden released on Tuesday. Meanwhile, annual growth was just 1.4 percent, compared to the Riksbank's prediction of 1.8 percent growth.
The kronor lost around five ore against both the dollar and the euro, the impact of which could be seen in high numbers of Swedish residents choosing to stay at home during the summer holiday season rather than travel overseas.
And market interest rates are falling, with interest on a ten-year Swedish government bond at a record low of -0.1 percent.
"The hope that we would see decent growth this year was based on the second quarter being good," said Olle Holmgren, an economist at bank SEB.
The Riksbank had projected growth of 0.1 percent against the first quarter and 1.8 per cent year-on-year. Nordea's economists had a forecast of 0.2 percent and 1.9 percent, respectively, while SEB's forecasts were 0.4 percent and 2.1 percent respectively.
"It looks quite weak going forward. This is a worrying sign for the Swedish economy. It confirms that growth is slowing down," said Holmgren, adding: "It's happening a bit faster and a bit more steeply than we had expected."
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