At 2.7% y/y, Swedish GDP came in way above our estimate (1.6% y/y), consensus and the Riksbank forecast (both 1.5% y/y). Full-year GDP for 2014 thus computes to 2.1% y/y, also above forecasts. (To add insult to injury – sort of but to the contrary – January retail sales also came in well above expectations.)
Looking at details, i.e. looking for excuses, we also come up empty handed. All important demand-side components (consumption, investments, public expenditure, net exports) came in at or above expectations and we are especially pleased/(displeased) to see that the SEK is finally working its magic, pushing exports up. However, if we compare our ex ante forecast with the outcome, it is clear that the main deviation comes from inventories, where we expected a strong cutback (-0.6pp q/q) and got almost none (-0.1pp q/q), and consumption, where we expected a very slight consecutive contribution (+0.1pp q/q) and got another strong reading (0.4pp y/y).
At times, we actually manage to say something reasonably intelligent about the inventory contribution but, given that we foresee (and have foreseen) an acceleration in demand growth over the coming year, the better-than-expected inventory situation does not necessarily equate to a destocking in Q1 15. Thus, the chances of activity data being strong over coming months are increasing, raising some hurdles for our view of pressure building on the Riksbank to act again.
Looking ahead, we intend to revise our demand forecast on the back of this data and if we adjust only for the outcome and keep our forecast GDP path intact, it would imply GDP growth for 2015 some 0.3pp higher (from 1.6% y/y to 1.9% y/y) than before.
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