STOCKHOLM (Reuters) – Sweden’s sluggish economy picked up speed in the fourth quarter thanks to strong exports, business investment and household spending, with the figures likely to support the central bank’s view that interest rates have now bottomed out after a series of cuts.
Gross domestic product grew 0.8% in the fourth quarter of 2024 from the previous three month period, and 2.4% compared to the same quarter a year earlier, final figures from the Statistics Office showed on Friday.
For the full year, the economy grew 1.0%.
Analysts had forecast quarterly growth of 0.2%, and 1.1% on the year, unchanged from the flash figures published in January. For the full year, the flash figure was 0.6%.
Exports, gross fixed capital formation and household consumption were the biggest contributors to the pick-up in growth, the Statistics Office said in a statement.
Sweden’s economy has been stuck in low gear in the last couple of years, with consumers wary of boosting spending even though rates have come down and real wages have started to pick up again after the inflation shock of 2022 and 2023.
The central bank has cut rates six times since last spring, hoping to boost growth. It said at its last meeting, when it eased the policy rate to 2.25%, that it had probably done enough.
But the outlook remains uncertain.
Data on Friday showed a dip in retail sales in January, and consumer confidence data this week also showed households are gloomy about the economy. Geopolitical developments could also weigh on growth.
On the other hand, inflation picked up in January and a survey by the NIER think tank showed many companies expecting to raise prices in the coming months.
“The key for the Riksbank is inflation trends, and the surprisingly high inflation is the main reason why we expect the Riksbank to stay on hold,” Nordea economist Torbjorn Isaksson said.
Flash inflation figures for February are due on March 6.
The central bank announces its next rate decision on March 20.
(Reporting by Simon Johnson; editing by Stine Jacobsen, Anna Ringstrom and Kevin Liffey)
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