Swedish economy likely to have continued expanding in Q1 2016, growth expected to be broad-based

The Swedish economy is likely to have continued expanding in the first quarter. The growth is expected to be broadly based. Consumer spending in Sweden continues to be strong, exports are rebounding, while public consumption and investment activity are growing.

“We expect this year’s Q1 GDP to have risen by 0.6% q/q and 4.3% y/y”, said Nodea Bank in a research report.

Overall, the Swedish economy has continued with its robust performance in the early part of 2016. The Labour Force Survey has reported that the total number of people in job has increased by 0.3% q/q, while the number of hours worked increased at a more rapid rate. The NIER’s Economic Sentiment Indicator pointed towards a good trend in Q1, but it has slightly declined in recent months. In the first quarter, the build-up on inventory was planned and was due to the export industry, particularly the auto industry, having become robust with additional products in production processes.

The Q1 GDP growth outlook is filled with uncertainty. Firstly, there were major calendar effects such as leap year and an early Easter that makes the projection more uncertain. Consumer spending had increased sharply due to major purchasing before the Easter weekend.

Meanwhile, the Riksbank’s priority is inflation, SEK and the ECB. The continuous robust economic growth in the country has not had quite an impact on the central bank’s monetary policy. It will become clear that the environment of low inflation is not because of economic anomalies in the country, noted Nordea Bank. Furthermore, the central bank’s hope that the robust growth will form inflation pressures. Hence, the central bank is likely to avoid using monetary tools, added Nordea Bank.