Sweden’s economy grew less than expected in the third quarter, when a lull in the virus during the summer months allowed businesses and households to return to a semi-normal existence.

Gross domestic product grew 4.3% from the previous quarter, according to an indicator published by Statistics Sweden on Thursday. Economists surveyed by Bloomberg had predicted 5% growth. GDP shrank 8.6% in the second quarter. The quarterly increase was largely driven by rising exports of goods, Statistics Sweden said. The kroner edged lower against the euro.

The biggest Nordic economy has so far weathered the pandemic better than most, and is set to contract only about half as much as euro zone GDP this year. Record government stimulus provided extra support to Swedes, who already enjoy one of the world’s most generous welfare systems. Bankruptcies so far this year are even lower than in 2019.

But the country, which never imposed a lockdown, has seen considerably more deaths than its Nordic neighbors. And in recent weeks new cases have spiked, with the government warning that Sweden now faces a bleak winter with the virus.

What Bloomberg Economics Says…

“The 3Q bounce confirms Sweden will see a more shallow recession in 2020 than most. Even so, there are signs of activity stalling and new containment measures at home and abroad spell downside risks during the winter months. Our forecast for 2021 growth is below consensus and below that of the Riksbank.”

— Johanna Jeansson, Bloomberg economist

Riksbank Governor Stefan Ingves has already said that forecasts for the fourth quarter will have to be revised down as new restrictions come into place.

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