Sweden's Economy Surprises with 0.8% GDP Growth in Q4 2024
Sweden's GDP grows by 0.8% in Q4 2024, exceeding forecasts with strong exports and consumption.
Key Points
- • Sweden's GDP increased by 0.8% in Q4 2024, surpassing expectations of 0.3%.
- • Household consumption rose by 0.7%, while public consumption increased by 0.1%.
- • Exports grew by 0.7%, and imports decreased by 0.5%, contributing to trade gains.
- • The government reported a deficit of 61.6 billion kronor, up from 51.5 billion in Q4 2023.
In a surprising development, Sweden's gross domestic product (GDP) grew by 0.8% in the fourth quarter of 2024, significantly beating analysts' expectations of just 0.3%. This increase, reported by the Swedish National Statistics Agency (SCB), is attributed to robust export activity coupled with a pullback in imports, particularly benefiting the manufacturing sector. Jessica Engdahl, section chief at SCB, noted, "The year ended relatively strongly, with increases observed in several components of GDP, primarily driven by a strong goods net."
Key components driving this growth include a 0.7% rise in household consumption and a marginal 0.1% increase in public consumption, bolstered by spending at municipal levels. Fixed gross investments saw a notable increase of 1.8%, predominantly due to construction and infrastructure projects. Export levels climbed by 0.7% while imports decreased by 0.5%, collectively adding a positive net balance of 0.6 percentage points to GDP growth through trade.
While businesses experienced a 0.7% increase in value added, production in goods industries surged by 1.7% compared to a 0.3% growth in services. However, there was a slight overall decrease in employment, with a 0.2% drop in the number of employed individuals, although hours worked rose by 0.5%, indicating potential improvements in productivity. Households reported a 3.5% increase in real disposable income year-over-year.
Public finances presented a mixed picture, with the government reporting a deficit of 61.6 billion kronor for Q4 2024, an increase from 51.5 billion kronor in the same quarter of 2023. The economic outlook remains a debate; while Nordea forecasts that recovery will gain momentum later this year, Handelsbanken cautions that sustained increases in economic indicators are necessary to confirm ongoing improvement.
Overall, the latest economic figures have sparked discussions around a tentative recovery in the Swedish economy, with varying opinions on its sustainability moving into 2025.