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UPDATE 1-Swedish June exports surge, temper Q2 GDP outlook

Published 07/27/2009, 05:17 AM
Updated 07/27/2009, 05:24 AM
SWEDa
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* Trade surplus 17.3 bln SEK in June vs 9.7 bln in May

* Exports rise sharply vs May, helped by more working days

* Analysts say an upbeat sign for Q2 GDP on Friday

(Adds detail, background, analyst comment)

By Niklas Pollard and Oskar von Bahr

STOCKHOLM, July 27 (Reuters) - Sweden's trade surplus nearly doubled in June from the previous month on the back of a surge in exports, data showed on Monday, spurring recovery hopes ahead of GDP figures due later this week.

Sweden's trade surplus surged to 17.3 billion Swedish crowns ($2.31 billion) in June from an upwardly revised 9.7 billion the month before, the statistics office said.

The global economic downturn spawned by the financial crisis has pummelled Sweden's large export industry in recent quarters, sending companies such as world number two truckmaker Volvo racing to scale back production and cut costs.

But a weak Swedish crown has provided some relief for the Nordic country's heavyweight exporters, most of whom have the majority of their sales in euros or dollars but a greater share of costs in crowns.

Statistics office SCB said goods exports equalled 91.1 billion crowns in June, up from 78.4 billion in May but well below the 103.1 billion posted in the year-ago month.

"The figures were clearly better than expected. It is exports that are the main reason for the improvement which is quite broad," Swedbank analyst Knut Hallberg said.

"It's looking a bit better for the companies, and that is consistent with the increased optimism we have seen in, among other things, PMI (the Purchasing Managers' Index). It is certainly also the crown effect, that we have an increase in sales."

BOON TO GDP

The annual rate of decline in exports slowed in June and while this was due in part to a larger number of working days, it still boded well ahead of second-quarter gross domestic product (GDP) figures later this week, analysts said.

"It was surprisingly strong and it changes the conditions for the GDP figure that is due on Friday," Nordea analyst Torbjorn Isaksson said.

"It's important input ahead of GDP, which in turn is important for the Riksbank. The development of economic activity and GDP and resource utilisation are key right now for when we will see a rate hike."

Second-quarter GDP figures due on Friday are expected to show the Swedish economy posted a new record fall in the second quarter, hit by falling exports.

A Reuters poll of 17 economists last week showed the economy was seen having contracted 6.6 percent from a year earlier and 0.4 percent from the prior quarter.

Handelsbanken chief economist Jan Haggstrom said the trade data on Monday meant GDP was likely to fall less than feared.

"We may certainly see it come in half a percentage point stronger than we had expected if you look at foreign trade in isolation. We had expected GDP to contract 6.5 percent, but the decline may come in below 6 percent," he said.

(Reporting by Niklas Pollard and Oskar von Bahr; additional reporting by Mia Shanley, Katarina Gustafsson and Elinor Schang; Editing by Ruth Pitchford)

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