Swedish economic growth likely to decelerate markedly towards end of 2018 – Nordea Bank

The Swedish central bank Riksbank would have inflation tailwinds in 2018 because of SEK softness and energy prices, noted Nordea Bank in a research report. Meanwhile, the GDP growth looks to be turning into a clear headwind for the first time in several years.

Headline CPIF inflation would be above/close to 2 percent the remainder of 2018 and most of 2019, Riksbank might not consider a rate hike before underlying CPIF excluding energy also is close to 2 percent. That will not happen until January 2019. Looking at inflation alone, thereby, there is a possible case for the central bank for a first rate hike in first quarter even though such a rate hike is unlikely to occur, stated Nordea Bank.

Swedish economic growth looked OK in the March quarter. However, leading indicators have begun easing. According to Nordea Bank’s broad leading GDP indicator, which includes 10 components, depicts a quite marked deceleration in GDP year-on-year towards the end of 2018.

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