SWEDEN: Soft Activity Backdrop Ahead Of Iran War Inception

Swedish GDP was unchanged in February, according to latest monthly activity readings. This was below the three-analyst consensus of 0.5%, and leaves 3m/3m growth tracking at a soft -0.9% (vs -0.2% in Jan, 0.5% in Dec). Potential negative growth effects stemming from the Iran war may limit the scope for a rebound in March. 

• While the data is lagged, it provides a snapshot of the economy before the Iran war started. Overall, it supports our view that any tightening from the Riksbank in response to the energy shock should be less aggressive than the likes of the ECB. Indeed, had it not been for the latest shock, data outturns would have strengthened the case for a Riksbank cut.
• Household consumption rose 0.1% M/M, down from 0.5% in Jan but still above the weak -3.3% in December. Weakness was seen in “other goods and services” (-4.5%) and restaurants and accommodation (-1.4%), but this was offset by more modest increases across other categories.
• Private sector production rose 0.1% after a -1.2% fall in January. Industry (5.1% vs -6.5% prior) and construction (2.8% vs -5.7% prior) increases were offset by a decline in services production (-0.8% vs -0.1% prior).