Sweden’s economy shrank significantly more than expected in August, driven by an export decline, which raises concerns that the recovery in the largest Nordic economy may be curtailed.
Gross domestic product decreased by 3.8 per cent in August, the largest fall since the monthly indicator was launched in February, according to an estimate from Statistics Sweden. Economists surveyed by Bloomberg predicted a decline of 0.5 percent.
The Swedish krona extended its decline to trade 0.5 per cent weaker against the euro after the data, which may confirm the central bank’s view that it is still too early to call back the stimulus from the pandemic era. The Riksbank has resisted the temptation to signal when it would raise borrowing costs above zero, despite a rising turnaround among large central banks.
Sweden’s economy, which regained its pre-pandemic size faster than most industrialized countries, is increasingly hit by bottlenecks in the supply chain. The trade deficit rose last month to its highest level in five years, and exports fell to its lowest level since January.
“Pretty ugly August data coming out of Sweden today. If not a sign that the recovery stops at least a real setback for extreme growth bulls. ”-Michael Grahn (@ MichaelGrahn1) October 6, 2021.
Image courtesy of Fredrik Lerneryd