Swedish 3rd Quarter GDP growth up to “Asian” levels at 6.9%

Sweden continues to show strong GDP growth and in the 3rd quarter of 2010 was significantly higher than the 5.2% forecast earlier by the Riksbank and reached  “Asian” levels at 6.9%. Unemployment is down and expected to continue to reduce slowly and is currently at about 8%. The growth is primarily export led and exports to Asia and Latin America are particularly strong.

Freely translated from Svenska Dagbladet:

Today came the news that Sweden’s GDP landed at 6.9 percent for the third quarter of this year. The positive figure may accelerate interest rate increases. “It’s a really good figure. This is well above the Riksbank’s assessment “said Annika Winsth, chief economist at Nordea Bank. The Riksbank believed that the increase in GDP would end up at 5.2 percent for  the third quarter and Nordea’s forecast was forjust 6.2 percent. This shows that Sweden’s economy is growing across the board, among households and businesses as well as in the state, according to Nordea’s chief economist Annika Winsth. “This means that there is still so much spare capacity left in companies, that there is a belief in the future. They dare to invest, “she says.

Robert Bergqvist, chief economist at SEB was surprised at the growth figure of 6.9 percent. “It’s a long way from what we thought. What strikes me is that the sun is shining so brightly in Sweden, while many countries in Europe have huge problems to contend with. Industry and employment have recovered remarkably quickly, although we are not 100 percent back yet”, he says. The main reasons for this is, according to Robert Bergqvist, that taxes and the krona exchange rate has made household purchasing power strong, helped the export industry and given strong public finances. The latter means that Sweden can avoid drastic tax increases, he says.

According to Annika Winsth  Sweden’s economy is almost back to a “normal” economic level. “There is little left to do on the employment side “, she says. “We went  stronger into the economic crisis than many other countries, and that means that we do not get hit as hard” she says.

But Nordea’s Chief Economist worries about the the crises in a number of European countries and believes growth will be slightly weaker in 2011. “Countries with large deficits lead to our exports declining”, she said.
SEB also believes in lower growth for 2011 at around 3.5 percent. Nordea and SEB’s assessment is that the strong growth will lead to the Riksbank raising the key bank rate by 0.25 percentage points in December and again in February and April. 

“The Swedish krona will strengthen compared with current levels, and then the interest rate will have to go up. We must be prepared”, says Robert Bergqvist.

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