Sweden: Better than expected Q1 GDP growth – Nordea Markets

Torbjörn Isaksson, analyst at Nordea Markets, notes that Sweden’s Q1 GDP growth was better than expected as it came out at 0.6% q/q and 2.1% y/y and was stronger than the Riksbank’s forecast.

Key Quotes

“The main surprise on the upside was export of services. The rise was broad based, and may be extra boosted by the recovery of the telecom company Ericsson. Exports of goods were on the weak side but not too far from our call. All indicators point to a slowdown in exports, which will probably hit export of services as well going forward.”

“There was some bad news in the GDP report as well, making the composition of GDP growth unfavourable.”

“The stronger than expected Q1 GDP reading point to some upside risks to our forecast for the full year of 2019 at 1.2% (Riksbank 1.7%). But it is too early to conclude that our forecast is too low as indicators have softened and a bit more than we had expected.”

“We see no reason to change our view on the Riksbank. The next rate hike remains distant.”