Sweden’s Recession Eases After Stimulus Measures
Sweden’s recession eased in the second quarter after government stimulus measures and record low central bank rates helped drag Scandinavia’s largest economy toward recovery.
Gross domestic product contracted an annual, work-day adjusted 6.2 percent, from a decline of 6.5 percent in the previous quarter, Statistics Sweden said in a statement today. The median forecast of 14 economists surveyed by Bloomberg was for a 6.7 percent contraction. GDP was unchanged from the first quarter after contracting 0.9 percent in the first three months.
“Longer term this shows the Swedish economy is stabilizing,” Nordea Bank AB economist Johanna Jeansson said in an e-mail. “We will see early signs of recovery in the second half of the year.” Jeansson expects the krona to gain against the euro in the “medium term.”
Riksbank Governor Stefan Ingves has eased policy more than his counterparts in Norway and Frankfurt, cutting the key rate to a record 0.25 percent as he struggles to jolt the economy out of recession. That’s underpinning the effect of government stimulus measures, with Prime Minister Fredrik Reinfeldt pledging to spend 45 billion kronor ($6 billion) this year to revive growth.
Krona Gain
The krona strengthened the most against the dollar since Oct instant cash advance. 14, gaining as much as 1.25 percent to 7.3211 and to trade at 7.3605 as of 10:35 a.m. in Stockholm. Against the euro, the krona gained the most since Nov. 28, jumping 1 percent.
Exports slumped an annual 18.3 percent while fixed investment sank 18.8 percent, the office said. Household consumption fell 2.2 percent, compared with a 3 percent drop in the first quarter. Imports declined 19.4 percent after dropping 14.8 percent the previous quarter.
Manufacturing returned to growth last month, ending an 11- month contraction, as companies that had trimmed stocks began to build up inventories on the prospect of a return of export demand, a survey of purchasing managers showed on July 1. Consumers also grew less pessimistic in July, with an index measuring household sentiment rising to minus 3.7 this month from minus 9 in June.
The economy will shrink 5.4 percent this year, the central bank estimated on July 2. Exports in June fell 12 percent compared with the same month in 2008, while imports fell 22 percent, trade data showed on July 27.