Swedish GDP growth slows as exports fall

OSLO: Sweden’s economy slowed at the start of the year as exports declined, dulling an investment boom in the largest Nordic economy.

Gross domestic product grew 0.4% in the first quarter and expanded an annual 2.2%, Statistics Sweden said yesterday. Analysts surveyed by Bloomberg estimated growth of 0.9% and 2.9%, respectively.

Sweden’s $500 billion economy has been outpacing much of the rest of Europe for the past two years, helped in part by spending to absorb a record inflow of migrants.

The central bank has stoked private consumption and investments by cutting interest rates deep below zero and pumping money into the economy by buying bonds in its efforts to spark inflation.

According to Statistics Sweden, exports fell 0.2% in the first quarter. Investments increased 2.5%, while public spending slid 0.2% and household consumption rose 0.5%.

The boom times had come in handy for the Social Democrat-led government, which is facing an election next year. It last month said it was tapping widening surpluses to raise spending on police, health care and education in a bid to shore up support.

Unemployment has slid consistently since the coalition came to power, falling from about 8% to below 7% now even as the nation saw an inflow of about 250,000 refugees.

Tightening capacity in the economy also lends support to the central bank, which is nearing the end of a record stimulus push to bring inflation back to target.

Headline consumer prices rose 1.9% in April, nearing the 2% target for the first time in more than five years.