Swedish growth slowed amid weak third quarter investment and public spending as an expansion in the Nordic region’s largest economy continues to abate from last year’s output peak.
GDP rose 0.5 percent from the previous quarter and posted an annual rate of 2.8 percent, Statistics Sweden said yesterday.
Analysts had estimated growth of 0.5 percent and 3.1 percent respectively.
The GDP data are bad news for the Riksbank since it “needs a strong domestic economy for inflation to rise,” said Torbjorn Isaksson, chief analyst at Nordea Bank AB.
The figures “support our view of further stimulus measures in December,” he said.
The Swedish economy boomed last year, when a record wave of refugees streaming into the country helped stoke spending.
The Riksbank has also unleashed an ultra expansionary monetary policy, cutting interest rates far below zero and pumping money into the economy through bond purchases in order to lift inflation toward its 2 percent target.
A number of analysts expect the Riksbank to extend its government bond purchases. Nordea and Danske Bank A/S also expect it to cut the benchmark repo rate, from minus-0.50 percent to minus-0.60 percent, when it announces its next decision on Dec. 21.
According to Olle Holmgren, an economist at SEB AB, the fact that public consumption was weaker than expected in the three months ending in September suggests the positive effects of last year’s refugee crisis are decreasing as the state spends less on accommodating and integrating migrants.
According to yesterday’s data from Statistics Sweden, exports rose 1.3 percent in the quarter, consumer spending rose 0.4 percent while general government expenditure and investments were both flat.
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