Sweden’s investments likely to expand 6.9 pct y/y in 2016, 2.7 pct in 2017

Sweden’s investment growth has been quite strong in the past few years. In the beginning it was because of robust public investment, but booming housing investments soon overtook it. Sometimes, quarterly growth rates in housing investments have surpassed 30 percent AR. For the 2015 entire year, housing investments averaged 16 percent year-on-year. Moreover, as construction industry continues register robust growth rates, the growth is likely to remain impressive at 13.6 percent year-on-year in 2016, according to Danske Bank.

But as the housing market settles and as projects are being completed, a swift slowdown to 2.9 percent year-on-year is likely in 2017. Indeed, in particular, given the still low supply and low financing costs, there are certain risks on the upside to this projection, added Danske Bank.

Meanwhile, the ‘underlying’ investment growth – business sector investment growth - continues to be quite bleak and has rebounded in the 0 percent to 5 percent year-on-year range in the past few years. This is believed to be below replacement rates, signifying that the business sector capital stock in Sweden has been depleted in the past few years, stated Danske Bank.

“Overall investments or gross fixed capital formation is in all expected to grow 6.9 percent y/y (vol, wda) this year and be a measly 2.7 percent y/y (vol, wda) next year”, stated Danske Bank.