Sweden in Recession

Sweden has slipped into recession, announced the national statistics office on Friday, joining the Baltic Tigers Estonia and Latvia, which also recorded a decline in economic activity in the third quarter.

Swedish GDP decreased by 0.1 percent in the third quarter compared to the previous quarter. On an annual basis, GDP remained unchanged, reported the Swedish statistics office. For the first time since 2001, household consumption also decreased, by 0.2 percent, they highlighted in the office. The economy of the Baltic Tiger Estonia also recorded a decline in economic activity on an annual basis in the third quarter, by as much as 3.3 percent, after already recording a decline of 1.1 percent in the second quarter. The Estonian Ministry of Finance estimates that the decline in economic activity next year could be even stronger than previously expected, reaching a negative rate of as much as 3.5 percent, compared to the previously forecasted 2.1 percent. This year, however, the negative growth rate is expected to be 1.8 percent, estimates the Estonian central bank. In Latvia, they also predict that the recession in 2009 could be even deeper than previously anticipated, with a negative growth rate of 5.0 percent, compared to the previously forecasted 3.5 to 3.9 percent, emphasized Prime Minister Ivars Godmanis.

He presented the latest estimate after an extraordinary government meeting ahead of a new cycle of negotiations on the international aid package for the Latvian economy, which will be held next week. In the third quarter, the Latvian economy recorded a decline in activity of 4.2 percent, and a negative rate is also expected for the entire year of 2008, at a level of 1.5 to 1.7 percent. The central bank also predicts higher negative rates, based on the assumption that next year they could reach values of as much as 3.5 to 3.9 percent. Only Lithuania still records positive growth rates, but it has revised down its growth forecasts for the third quarter on an annual basis to 2.9 percent, compared to the previously forecasted 3.1 percent. Compared to the second quarter, the growth rate was 0.4 percent, they emphasize in the statistics office. In the second quarter, the annual growth rate was 5.2 percent. (H)