Sweden’s Growth Boom Under Suspicion

Sweden’s economy expanded twice more than forecast in the second quarter, driving the krona higher as speculation grew that the central bank will raise interest rates later this year. But the data may have been too good to be true. Second quarter data are usually subject to large revisions when the final report is released in September. On average in the past 10 years Statistics Sweden has had to change the quarterly and annual growth figures by 0.3 percentage point and 0.5 percentage point, respectively, in either direction, Bloomberg reported. Suspicion is now high that a downward revision may be coming, given the surprisingly strong growth print and because underlying data leading up to the GDP report hadn’t really signaled that such a boom was underway. “Maybe we should take this with a pinch of salt considering that we usually see downward revisions and as the figure was so strong compared to expectations,” said Ylva Heden Westerdahl, director of forecasting at Sweden’s National Institute of Economic Research. “We’re also going to adjust our forecast upward, but maybe not by as much as this GDP outcome indicates.”