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Fast Comment SwedenEconomy has cooled more than we thought - revised historic national accounts; updated Q2 GDP estimate

  1. Our forecast for 2019 GDP looks too high, but probability for our below-consensus 2020 forecast rises
  2. Slow growth strengthens our call that Riksbank rate rises will ultimately be cancelled
  3. Are macro risks larger than we thought? Household savings much lower ahead of a deteriorating economy

Please see graphs and comments below:

Growth decelerating more than previously thought: revised national accounts has the 2015 level revised up and growth in 2017 was better than previously accounted for - but since then the economy has been cooling faster 

New GDP outcome poses a challenge to our 2019 forecast for 1.5 percent growth, but likely strengthens our case for below-consensus growth in 2020. The Riksbank's and the government's respective forecasts appear too optimistic. This strengthens our forecast for the Riksbank calling off planned rate rises (but as we argue in our Swedish Rate Wrap, to be published later today, there is still a chance for a rise and rate decreases seem unlikely).

How robust are household finances if the downturn continues as forecast? Today's substantial downward revision of household savings ratio raises some questions. Our already lowish GDP forecast rests on the belief that consumers keep spending even as the economy is hampered by lower exports - will they really? Or are the risks of a more severe downturn higher? (The revised national accounts show households have been spending a lot more than previously estimated when travelling abroad, hence lower savings).

Q2 details 1 of 2 

Q2 details 2 of 2  


Johan Löf

Senior Economist


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