Swedish GDP nearly stagnated in on the quarter in Q3, in line with our forecast but weaker than consensus. Growth was also weaker than the Riksbank’s view.
However, we see the figures as stronger than expected. First, both Q1 and Q2 were revised upwards. Secondly, the domestic economy did even better than we had expected. Not least did fixed investments rise more than forecast, to large extent due to rising housing construction. Thirdly, inventories were much lower than our forecast, which we saw a risk for. Inventories held back GDP in Q3 by as much as 1.6% y/y, which could turn positive for the coming quarters.
Foreign trade came out roughly as expected, thus weak. It is the external demand which explains the current weak performance of the Swedish economy, while there is healthy growth in the domestic sectors. Add to this the rising housing prices and the swift upturn in employment, and much suggests that the domestic economy hardly needs additional stimuli through lower interest rates. This is an important reason to why we expect the Riksbank to stay on hold in December, despite persistent low inflation. Today’s GDP report strengthens this case.
Details, Q3 GDP components:
GDP: 0.1% q/q (Nordea 0.0; consensus & Riksbank 0.5; prior -0.1 revised from -0.2)
GDP: 0.3% y/y (Nordea 0.0; consensus & Riksbank 0.4; prior 0.6 revised from 0.1)
Household consumption: 2.1% y/y (Nordea 1.9; prior 2.0 revised from 1.9)
Gov. consumption: 1.9% y/y (Nordea 2.2; prior 2.4 revised from 2.0)
Fixed investments: 3.3% y/y (Nordea -1.1; prior -1.7 revised from -2.6)
Inventories, growth contribution: -1.6%-point (Nordea -0.8; prior 0.0 revised from 0.3)
Exports: -1.6% y/y (Nordea -1.4; prior -1.1 revised from -2.3)
Imports: -2.2% y/y (Nordea -1.5; prior -1.0 revised from -1.1)
Nordea