Stockholm: Sweden's economy grew for the fourth quarter in a row at the start of the year on a rebound in exports, which make up about half its output, increasing chances the central bank will raise its key lending rate in July.
Gross domestic product in the Nordic region's largest economy expanded 1.4 per cent from the previous quarter and 3 per cent from a year earlier, Stockholm-based Statistics Sweden said on its website.
The median estimate of 13 economists surveyed by Bloomberg was for one per cent growth. The fourth- quarter contraction initially reported was revised to show 0.4 per cent expansion.
Better-than-expected growth means "the Riksbank will take the first step and raise its rate at the start of July," said Robert Bergqvist, chief economist at SEB AB in Stockholm.
The Riksbank said April 20 it may raise its benchmark lending rate from a record-low 0.25 per cent as early as July.
Sweden's economy has benefited from rising exports, four income tax cuts since 2006 and record-low interest rates. The Riksbank has kept its benchmark lending rate at 0.25 percent since July, and exports rose for a fifth month in April.
The crown gained as much as 0.6 per cent against the euro and traded at 9.6679 in Stockholm. Against the dollar, the crown rose 0.4 per cent.
‘Positive Signals'
"The main surprise to our forecast was the strong outcome for private consumption that is reflecting high consumer confidence and the positive signals from the labour market," said Stefan Hoernell, senior economist at Svenska Handelsbanken AB in Stockholm, in a note to clients. "Also, fixed investments and inventories surprised positively."
Assa Abloy AB, the world's largest lockmaker, said on April 21 that the business trend "improved on all markets" in the first quarter for the first time since the outbreak of the financial crisis. SKF AB, the world's biggest maker of ball bearings, said April 20 it expected "significantly higher" demand in the second quarter compared with the same period last year.
Unemployment rises
"The manufacturing industry reports significant growth in both new orders and output volume for the first quarter," Sweden's National Institute of Economic Research said April 29. "The industry forecasts continued strong order and output growth for this quarter."
Prime Minister Fredrik Reinfeldt on April 15 increased stimulus measures to 1.2 per cent of GDP this year after trailing in most opinion polls in advance of parliamentary elections in September. Measures include a fourth round of income tax cuts.
Sweden posted the smallest public deficit in the European Union last year at 0.5 per cent of GDP and is likely to keep that position this year, according to European Commission forecasts.
The government has said that if it wins the elections it will make welfare spending and income tax cuts a priority to create more jobs after unemployment rose to 9.8 per cent in April — the highest level in at least five years.
