Riksbank Shouldn’t Place Too Much Weight On The Q2 GDP Indicator

The Swedish Q2 GDP indicator was -0.8% Q/Q and 0.0% Y/Y. The Riksbank had forecasted a flat Q/Q reading in the June MPR. SEK has been little moved by the release, with markets likely aware that the GDP indicator is often not a reliable estimate.

• For example, in Q1 actual GDP was 0.7% Q/Q and 0.7% Y/Y, but the flash indicator had pointed to a -0.1% Q/Q and -1.1% Y/Y reading. In fact, the GDP indicator is not even considered an “official statistic” by Statistics Sweden.
• As such, the Riksbank are not likely to place too much weight on this indicator, with the July inflation data (August 14) the key data point before the August 20 meeting, where a 25bps cut is expected.
• The June monthly GDP reading was quite strong at 0.9% M/M, though May was revised two tenths lower to -0.1% M/M. This suggests the weak quarterly reading was weighed down by April’s -0.6% M/M print.
• Elsewhere, June retail sales were -0.3% M/M, with May’s figure revised up a tenth to 0.3%. On a 3m/3m basis, sales grew 0.2% (vs 0.3% in April and May).
• The full Q2 GDP release is due on August 29.