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Swedish economy’s bounce-back extends into August as more stimulus beckons

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Sweden’s economy powered ahead in the second quarter, final growth data showed on Friday, as a separate business sentiment reading suggested a recovery that has seen GDP already surpass its pre-pandemic level had extended into August.

Gross domestic product grew 0.9% from the first quarter, according to statistics office data that matched a flash reading released last month. The rise took economic activity past its pre-crisis level, a landmark reached sooner than in most of the rest of Europe.

Friday’s data also showed the economy grew 9.7% year on year between April and June, down from an initial estimate of 10%.

The Swedish economy’s bounce-back from the impact of COVID-19 has come despite concerns about bottlenecks, rising costs and shortages of raw materials and other input goods.

The growth spurt also looks set to continue, according to NIER’s August business and consumer sentiment indicator.

The index dipped marginally to 121.1 points, but stayed within touching distance of the 25-year high it hit the previous month, the think-tank said on Friday.

With COVID-19 infection rates increasing again, Finance Minister Magdalena Andersson – the frontrunner to take over as prime minister when Stefan Lofven steps down in November – said on Thursday it was too soon to withdraw fiscal support.

She promised an autumn budget that would inject around 74 billion crowns ($8.5 billion) to boost recovery and support a long-term shift to a carbon-neutral economy.

Sweden’s economy shrank 2.8% in 2020 as a result of the pandemic, far less than many of its European peers.