Swedish GDP grows robustly in first quarter, Q4 2015 growth revised upwardly on higher fixed investments

Sweden’s GDP in the first quarter of 2016 grew 0.5% on a sequential basis, and 4.2% on year-on-year basis, on par with Riksbank’s estimates. The fourth quarter of 2015’s GDP growth was upwardly revised by 0.3 percentage points to 1.6% q/q and 4.9% y/y on higher fixed investments. Majority of the components in Q1 were in line with expectations, noted Nordea Bank in a research report.

Domestic demand recorded a broad upturn, while goods exports registered certain improvement. Fixed investments came in more robust than projected; however, services exports surprised on the downside. Decline in services exports were broad-based; however it came after posting strong growth for several quarters.

The build-up in inventory is mainly expected to be due to export industry strengthening and using additional products in production processes. Therefore, it should not be a drag on economic growth in the quarters to come, said Nordea Bank.

Major calendar effects of early Easter and leap year made it slightly difficult to interpret certain components. Consumer consumption increased strongly by 3.1% y/y; however, spending was likely stimulated by major purchasing before the Easter weekend.

Overall, Sweden’s economy is likely to continue growing at a robust rate in the starting of the year. The second quarter’s outlook continues to be decent, whereas growth is likely to decelerate more noticeably later in 2016, according to Nordea Bank. The strong economic growth streak of Swedish economy has had unexpected little effect on the central bank. However, the robust growth underpins the view that the central bank is done with easing, added Nordea Bank.