Wednesday February 15 2017
Sweden Holds Repo Rate at -0.5%
Riksbank | Joana Ferreira | joana.ferreira@tradingeconomics.com

Sweden's central bank held its benchmark repo rate at -0.5 percent on February 15th, 2017, as widely expected, saying a continued strong level of economic activity and a krona that does not appreciate too rapidly are required for inflation to stabilise around the 2 percent target. Policymakers added that there is still a greater probability that the rate will be cut than that it will be raised in the near term and that purchases of government bonds will continue for the first six months of 2017, as was decided in December.

Excerpts from the Statement by the Executive Board of the Riksbank:

The economic outlook abroad is brighter in the near term, and the recovery is continuing in line with earlier forecasts. At the same time, there is considerable political uncertainty in several areas of the world, which means that the risks of setbacks have increased.

In Sweden, the Riksbank's expansionary monetary policy has contributed to high growth, falling unemployment, rising inflation and inflation expectations that are back at 2 per cent. CPIF inflation was close to 2 per cent in December, but the recent upturn has been primarily driven by a temporary rise in energy prices. Excluding energy prices, inflation is still low. The strong economic activity creates good conditions for inflation to continue rising. However, inflation is not expected to stabilise around 2 per cent until the end of 2018.

The krona exchange rate continues to create uncertainty about the development in inflation. Since December, the krona has been clearly stronger than expected. This rapid appreciation is not expected to continue, however. The Riksbank's forecast is for the krona to appreciate slowly as economic activity improves.

To ensure inflation stabilises around the target, it is necessary for economic activity to remain strong and for the krona to appreciate at a not too rapid pace. The political uncertainty abroad is enhancing the need for monetary policy to remain expansionary. The Executive Board has decided to hold the repo rate unchanged at -0.50 per cent. The repo rate path reflects the fact that there is still a greater probability that the rate will be cut than that it will be raised in the near term, and that slow increases will not begin until the start of 2018. Purchases of government bonds will continue for the first six months of 2017, as decided in December 2016. Until further notice, maturities and coupon payments will be reinvested in the government bond portfolio. The Executive Board has also taken a decision to extend the mandate that facilitates a quick intervention on the foreign exchange market.

The Executive Board is still prepared to make monetary policy more expansionary if the upward trend in inflation were to be threatened and confidence in the inflation target weakened. All of the tools that the Riksbank has described earlier, most recently in the September 2016 Monetary Policy Report, can as always be used if necessary.

Monetary policy needs to be expansionary to safeguard the role of the inflation target as nominal anchor for price-setting and wage formation. But the low interest rate levels also entail risks, such as those linked to the high and increasing household indebtedness. To achieve long-term sustainable development in the Swedish economy, these risks need to be managed via targeted measures within housing policy, fiscal policy and macroprudential policy.




Thursday January 26 2017
Swedish Trade Surplus Narrows In December
Statistics Sweden | Joana Ferreira | joana.ferreira@tradingeconomics.com

Swedish trade surplus fell sharply to SEK 1.0 billion in December 2016 from SEK 4.0 billion in the same month of the previous year, as exports rose by 11 percent while imports increased at a faster 15 percent. For the whole year of 2016, Sweden posted a trade deficit of SEK 6.8 billion compared with a surplus of SEK 13.8 billion in 2015.

The value of exports in December 2016 amounted to SEK 109.3 billion, while imports were valued at SEK 108.3 billion. Compared with December 2015, exports increased by 11 percent in value while imports increased by 15 percent in value.

Trade with countries outside the EU resulted in a surplus of SEK 15.0 billion, while EU trade resulted in a deficit of SEK 14.0 billion.

There was one weekday more in December 2016 than in December 2015.

Seasonally adjusted, the net trade surplus amounted to SEK 0.2 billion in December 2016, compared with a surplus of SEK 0.5 billion in November 2016. The corresponding figure for October 2016 was a surplus of SEK 0.4 billion.

Considering the whole year of 2016, the value of exports has increased by 1 percent compared with 2015, while the value of imports increased by 3 percent. Exports amounted to SEK 1193.7 billion and imports were valued at SEK 1200.5 billion, resulting in a deficit net trade balance of 6.8 billion for 2016. It was the first trade gap since 1982 and the biggest deficit since 1980. The corresponding surplus figure in 2015 was SEK 13.8 billion.




Thursday December 29 2016
Sweden Trade Gap Narrows 78.9% YoY In November
Statistics Sweden | Joana Taborda | joana.taborda@tradingeconomics.com

The trade deficit in Sweden declined to SEK 1.1 billion in November of 2016 from a SEK 5.2 billion gap a year earlier. It is the smallest shortfall for a November month in two years as exports rose the most since June of 2015 and imports rebounded.

Exports jumped 13 percent year-on-year to SEK 113.4 billion after being flat in the previous month. It is the biggest increase since June of 2015. Imports rose 8.5 percent to SEK 114.5 billion, following a 1 percent fall in the previous period. It is the biggest gain in a year.

Trade with countries outside the EU resulted in a surplus of SEK 14.9 billion, while EU trade showed a SEK 16.0 billion gap.

Seasonally adjusted, the trade surplus amounted to SEK 0.4 billion in November 2016, compared with a surplus of SEK 0.3 billion in October 2016.

Considering the first eleven months of the year, exports were flat at SEK 1084.6 billion while imports rose 2 percent year/on/year to SEK 1092 billion, resulting in a deficit of SEK 7.4 billion. The corresponding surplus figure for these months one year earlier was a gap of SEK 9.8 billion.


Wednesday December 21 2016
Sweden Holds Repo Rate At -0.5%, Extends QE
Riksbank | Joana Ferreira | joana.ferreira@tradingeconomics.com

Sweden's central bank held its benchmark repo rate at -0.5 percent on December 21st, 2016, as widely expected, and expanded its programme of asset purchases by SEK 30 billion during the first six months of 2017, saying monetary policy needs to remain very expansionary for inflation to rise towards the 2 percent target. Policymakers added that there is a greater probability that the rate will be cut than that it will be raised in the near term and that increases in the repo rate are not expected to start until the beginning of 2018.

Excerpts from the Statement by the Executive Board of the Riksbank:

The Riksbank's expansionary monetary policy has had a broad impact and pushed down interest rates in the Swedish economy. Monetary policy has thus contributed to the positive development in the Swedish economy in recent years, with high growth, falling unemployment and rising inflation. Long-term inflation expectations are also close to 2 per cent. The increasingly strong economic activity means there are good conditions for inflation to continue rising.

But there are still risks that can jeopardise the upturn in inflation. Inflation has been lower than expected in recent months, and it is still uncertain how quickly it will rise going forward. It is difficult to know, for instance, how the krona exchange rate will develop in an environment where the ECB has extended its asset purchase programme and the Federal Reserve has raised its policy rate. The Riksbank assesses that the krona will strengthen slowly in the period ahead. An overly rapid appreciation of the krona could dampen import prices and the demand for Swedish exports and make it more difficult to bring up inflation.

Monetary policy needs to remain very expansionary for inflation to rise towards 2 per cent. The Executive Board of the Riksbank has decided to hold the repo rate at −0.50 per cent and there is still a greater probability that the rate will be cut than that it will be raised in the near term. Increases in the repo rate are not expected to begin until the beginning of 2018. To further support inflation, the Executive Board has also decided to extend the purchases of government bonds by SEK 30 billion during the first half of 2017. The purchases include both nominal and real government bonds, corresponding to SEK 15 and SEK 15 billion, respectively. Until further notice, maturities and coupon payments on the government bond portfolio will be reinvested, during 2017 to a value of around SEK 30 billion. There will be a large maturity in August, but reinvestments will begin at the beginning of 2017 and are planned to continue throughout the year. In the middle of 2017, the Riksbank's purchases will amount to SEK 275 billion, excluding reinvestments.

The Executive Board still has a high level of preparedness to make monetary policy more expansionary if the upward trend in inflation were to be threatened and confidence in the inflation target weakened. 


Tuesday November 29 2016
Swedish Economy Expands 0.5% In Q3
Statistics Sweden | Yekaterina Guchshina | yekaterina@tradingeconomics.com

Sweden's gross domestic product advanced 0.5 percent in the third quarter of 2016, following an upwardly revised 0.6 percent expansion in the second quarter and in a line with market expectations, according to preliminary estimates. Household consumption rebounded and net external demand contributed positively while fixed investment and government expenditure were unchanged. On a yearly basis, the economy advanced 2.8 percent, easing from an upwardly revised 3.6 percent growth in the previous period and below market expectations of 3 percent.

On a seasonally adjusted basis, household consumption expanded 0.4 percent (-0.1 percent in Q2); while fixed investment remained unchanged (+1.9 percent in Q2); and general government expenditure also showed no growth (+1.2 percent in Q2). 

Net external demand contributed positively, as exports rose 1.3 percent (-0.4 percent in Q2) while imports grew 0.6 percent (+0.6 percent in Q2).

On the production side, service-producing industries increased by 0.7 percent (+1.4 percent in Q2) and production of goods rose by 0.2 percent (-1.1 percent in Q2). 

Employment measured as the total number of hours worked decreased by 0.1 percent and the number of persons employed fell by 0.3 percent.




Monday November 28 2016
Swedish Trade Gap Narrows In October
Statistics Sweden | Yekaterina Guchshina | yekaterina@tradingeconomics.com

Swedish trade deficit decreased to SEK 2.7 billion in October of 2016 compared to a SEK 3.1 billion gap in the same month a year earlier.

The value of exports in October 2016 amounted to SEK 102.9 billion, while imports were valued at SEK 105.6 billion. Compared to October 2015, exports and imports decreased by 1 percent.

Trade with countries outside the EU resulted in a surplus of SEK 12.4 billion, while the EU trade resulted in a deficit of SEK 15.1 billion.

Seasonally adjusted, the net trade deficit amounted to SEK 0.4 billion in October 2016, compared with a deficit of SEK 0.5 billion in September 2016. The corresponding figure for August 2016 was a deficit of SEK 0.6 billion.

During January–October, the value of exports has decreased by 1 percent compared with the corresponding period one year ago, while the value of imports increased by 1 percent. Exports amounted to SEK 970.5 billion and imports were valued at SEK 977.1 billion, resulting in a deficit net trade balance of 6.6 billion for January–October 2016. The corresponding surplus figure for these months one year earlier was SEK 15.0 billion.


Thursday October 27 2016
Sweden Holds Key Rate at -0.5%
Riksbank | Joana Taborda | joana.taborda@tradingeconomics.com

The central bank of Sweden left its benchmark repo rate unchanged at -0.5 percent on October 27th 2016 as widely expected, saying the upturn in the Swedish economy is continuing, but it will take longer for the inflation to reach the 2 percent target. The SEK 245 billion quantitative easing programme was left steady but the central bank added that it is prepared to extend the purchases of government bonds and that the probability of a rate cut increased.

Excerpts from the Statement by the Executive Board of the Riksbank:

In Sweden, the Riksbank's cuts to the repo rate and the purchases of government bonds have had a broad impact and have pushed many rates down. This has contributed to positive development in the Swedish economy with high GDP growth and falling unemployment. Inflation has been rising since 2014 and long-run inflation expectations are back around 2 per cent. However, in recent months inflation has slowed down, which illustrates the uncertainty over how quickly inflation will rise towards the target.

The Riksbank now assesses that it will take longer for inflation to reach 2 per cent. The upturn in inflation therefore needs continued strong support. The Executive Board assesses that the repo rate needs to be held at the current low level, −0.50 per cent, for six months longer than was assumed in September. The Board does not expect to begin slowly raising the rate again until early 2018. The repo-rate path now also reflects a greater probability that the rate could be cut further. In accordance with previous decision, purchases of nominal and real government bonds will continue so that these amount to SEK 245 billion at the end of 2016. Until further notice, maturities and coupon payments on the holdings in the government bond portfolio will be reinvested. Prior to the monetary policy meeting in December, the Executive Board is also prepared to extend the purchases of government bonds. As the current asset purchase programme will run for the remainder of the year, there is thus opportunity to await further information that can affect the decision to extend the purchases. Examples of such information include the outcomes for inflation in the near term and actions of other central banks.

There are several factors that create uncertainty in the inflation forecast. The Riksbank therefore still has a high level of preparedness to make monetary policy even more expansionary if the upward trend in inflation were to be threatened. This also applies between the ordinary monetary policy meetings. All of the measures that the Riksbank has described earlier can still be used.

Monetary policy needs to be expansionary to safeguard the role of the inflation target as nominal anchor for price-setting and wage formation. But the low interest rate levels also entail risks, such as increased household indebtedness. To achieve long-term sustainable development in the Swedish economy, these risks need to be managed via targeted measures within macroprudential policy, housing policy and fiscal policy.


Tuesday September 27 2016
Swedish Trade Gap Hits Record High in August
Statistics Sweden | Joana Ferreira | joana.ferreira@tradingeconomics.com

Swedish trade deficit increased sharply to SEK 10.3 billion in August 2016 compared to SEK 2.7 billion in the same month a year earlier. It was the biggest trade gap on record, as exports decreased by 2 percent while imports increased by 7 percent. Trade with countries outside the EU resulted in a surplus of SEK 4.5 billion, while EU trade resulted in a deficit of SEK 14.8 billion.

The value of exports in August 2016 amounted to SEK 87.4 billion, while imports were valued at SEK 97.7 billion. Compared to August 2015, exports decreased by 2 percent in value while imports increased by 7 percent in value.

Trade with countries outside the EU resulted in a surplus of SEK 4.5 billion, while EU trade resulted in a deficit of SEK 14.8 billion.

Seasonally adjusted, the net trade deficit amounted to SEK 3.4 billion in August 2016, compared to a deficit of SEK 2.5 billion in July 2016. The corresponding figure for June 2016 was a deficit of SEK 1.6 billion.

In the first eight months of 2016, the value of exports decreased by 2 percent compared to the corresponding period one year ago, while the value of imports increased by 1 percent. Exports amounted to SEK 758.9 billion and imports were valued at SEK 764.9 billion, resulting in a deficit net trade balance of 6.0 billion for January – August 2016. The corresponding surplus figure for these months the previous year was SEK 17.8 billion.


Wednesday September 14 2016
Swedish Q2 GDP Growth Revised Up to 0.5%
Statistics Sweden | Joana Ferreira | joana.ferreira@tradingeconomics.com

Sweden's gross domestic product was upwardly revised to growth of 0.5 percent in the second quarter of 2016 from the previous three month period, following a 0.4 percent expansion in the first quarter. Government expenditure and fixed investment were the main contributors to growth while household consumption was unchanged and net external demand contributed negatively.

On a seasonally adjusted basis, general government expenditure expanded 1.2 percent (+0.6 percent in Q1); fixed investment advanced 1.8 percent (+1.7 percent in Q1); and inventories added 0.2 percentage points to growth. 

Meanwhile, household consumption showed no growth (+0.7 percent in Q1); and net external demand contributed negatively, as exports contracted 0.4 percent (-0.6 percent in Q1) while imports grew 0.8 percent (+1 percent in Q1).

On the production side, output of goods and services increased 0.5 percent (+0.4 percent in Q1). Service-producing industries grew by 1.4 percent (+0.8 percent in Q1) while production of goods decreased by 1.3 percent (-0.1 percent in Q1). 

Employment measured as the total number of hours worked increased by 0.4 percent and the number of persons employed increased by 0.6 percent.

Compared to the second quarter of 2015, the GDP advanced 3.4 percent, slowing from a 4.2 percent expansion in the the previous three-month period while beating preliminary estimates of 3.1 percent growth.


Wednesday September 07 2016
Sweden Leaves Key Rate Steady at -0.5%
Riksbank | Joana Taborda | joana.taborda@tradingeconomics.com

The central bank of Sweden left its benchmark repo rate unchanged at -0.5 percent on September 7th 2016 as widely expected, saying the inflation is rising and the economy is developing strongly but there's still considerable uncertainty abroad. Policymakers added that will likely not start raising rates until the second half of next year.

Excerpts from the Statement by the Executive Board of the Riksbank:

The international recovery is proceeding at a moderate rate. Economic policy uncertainty continues to be high, among other reasons due to the result of the British referendum. Economic signals following the referendum result have not been clear-cut and it is still too early to draw any clear conclusions regarding the effects.

Supported by the expansionary monetary policy, the Swedish economy has strengthened rapidly and activity is expected to continue to be strong over the next few years. CPIF inflation has shown a rising trend since 2014 and is now just below 1.5 per cent. The situation on the labour market has continued to improve and unemployment is falling. These developments will continue to have an effect on inflation with some time lag. Conditions are thus good for a continued rise in inflation.

The prospects for economic activity and inflation in Sweden remain largely unchanged since the monetary policy meeting in July and now, like then, the assessment is that a continued expansionary monetary policy is needed to maintain the rising trend in inflation.

Not until the second half of 2017 does the Executive Board consider it to be appropriate to begin slowly increasing the repo rate, when inflation is expected to be close to 2 per cent. In accordance with previous decisions, purchases of nominal and real government bonds will continue so that these amount to SEK 245 billion at the end of 2016. Until further notice, maturities and coupon payments on the holdings in the government bond portfolio will be reinvested.

There are several factors that create uncertainty in the inflation forecast. These include international developments, among others the effects of the result of the British referendum and weaknesses in the European banking system. Another factor is the development of the krona. The Executive Board therefore remains, as before, highly prepared to make monetary policy even more expansionary if necessary, even between the ordinary monetary policy meetings. Monetary policy needs to be expansionary to safeguard the role of the inflation target as nominal anchor for price-setting and wage formation. But the low interest rate levels also entail risks, such as increased household indebtedness. To achieve long-term sustainable development in the Swedish economy, these risks need to be managed via targeted measures within macroprudential policy, housing policy and fiscal policy.