Swedish economy ekes out growth in first-quarter despite pandemic hit

FILE PHOTO: Sign assures people that bar is open during coronavirus outbreak in Stockholm

STOCKHOLM (Reuters) - Sweden's economy weathered the effects of the coronavirus outbreak and efforts to halt its spread in the first quarter, growing 0.1% from the previous three-month period, the Statistics Office said on Friday.

Gross domestic product increased 0.4 percent from a year earlier, the Statistics Office said in final figures for the period.

A flash estimate in early May, showed gross domestic product decreased 0.3% in the first three months of the year compared to the final quarter of 2019 and grew 0.5% from the same period in 2019.

A bigger dip in GDP is expected in the April-June period when the full effects of the novel coronavirus pandemic will be felt.

Banking group Nordea recently estimated that the economy will shrink 10% in the second quarter alone compared with the first three months of the year.

Still, Sweden's economy is unlikely to be the worst hit in Europe. French gross domestic product could fall by as much as 20% in the second quarter from the previous three months, the INSEE official statistics agency estimated this week. The euro zone's second-biggest economy contracted 5.8% in the first quarter.

Unlike France, Sweden did not go into total lock-down, though companies have been badly hit, workers sent home and many businesses have closed - temporarily or permanently.

The government reckons the economy will shrink around 7% this year. It has launched a slew of measures - worth around 245 billion Swedish crowns (21.01 billion pounds) - to soften the blow to the economy.

The median forecasts in a Reuters poll of economists had been for a 0.6 percent contraction in the first quarter and an increase of 0.5 percent from a year earlier.


(Reporting by Simon Johnson; Editing by Kirsten Donovan)