World Economy

Sweden GDP Up, But May Not Last Long

Forecasters think Sweden’s GDP will grow by more than previously predicted this year.Forecasters think Sweden’s GDP will grow by more than previously predicted this year.

Statistics Sweden figures indicated that the gross domestic product of Sweden increased 1.7% in the second quarter of 2017 with a 4% year-on-year growth rate. Economists initially called out a growth rate forecast of 2.8%, but the 4% rate caught them off guard and proved them wrong.

According to Finance Minister Magdalena Andersson, the data signifies the country’s economic vigor. She also said that household consumption and investment of properties are doing good, with former having an increase of 1.1%. Meanwhile, the public consumption dropped 0.2%, , The Local reported.

Sweden’s finance ministry will release new growth forecasts this month. Andersson stated that the figures from Statistics Sweden are a significant factor in the forecasts.

Nordea analysts think the economic growth of Sweden is “crazy strong”. Torbjorn Isaksson, Nordea’s chief analyst, said that the domestic sector is responsible for the improvement of the country’s economy.

Sweden is not the only country that enjoyed a good development in its GDP. The Guardian wrote that France, Spain and the US also experienced growth in their GDPs. France increased 0.5% both in the first and second quarter, Spain rose by 0.8% in the first quarter and 0.9% in the second, and the US had a growth of 0.3% in the first quarter and 0.6% in the second.

The recent GDP reports said that trade helped in furthering the growth in the previous quarter, which points to a good indication that the global economy is faring well.

However, there have been concerns that come with the Swedish economy’s growth, Business Insider Nordic reported. Danske Bank Chief Economist Michael Grahn said that this increase may not last long because the sectors that boosted Sweden’s economy have low-interest rates, which are household consumption and investments. Grahn stated that the two sectors are responsive to changes in interest rates.

Sweden’s National Institute of Economic Research has revised its prediction for GDP growth in 2017 to a more optimistic one of 3%, up from the previous forecast of 2.5%.

As growth was surprisingly strong in the second quarter it is thought that the upswing will be greater this year than initially expected, the NIER explained. Stronger than expected investment in businesses and housing is a driving factor.

“Domestic demand is driving it and robust growth in the rest of the world is providing support. In addition the upswing is reflected in strong public finances,” the NIER said in a statement.

Add new comment

Read our comment policy before posting your viewpoints