(Bloomberg) -- Sweden’s economy unexpectedly contracted in the third quarter, according to an initial estimate signaling that an expected recovery has yet to get off the ground.
In the three months through September, gross domestic product shrank by 0.1% on quarter, according to preliminary data published by Statistics Sweden Tuesday. The median forecast in a Bloomberg survey was for 0.3% growth from the previous three months. The initial estimate is often subject to sizable revisions.
Data on the health of the economy may sway officials at Sweden’s central bank, who gather next week to decide on how to proceed with making monetary policy less restrictive. The Riksbank has said that it is most likely to take its benchmark rate a quarter-point lower at both its remaining meetings this year. Yet it could also make a bigger move as inflation has fallen below the 2% target and three previous cuts have done little to spur an economic recovery.
“Sweden’s gross domestic product decreased in September, which together with weak development in July contributed to negative growth for the third quarter as a whole compared with the previous quarter,” Melker Pettersson Loberg, an economist at Statistics Sweden said in a statement.
The release indicates that a long-awaited pickup in activity remains elusive, and would mean a technical recession for the largest Nordic economy, if confirmed. That could increase the urgency for the central bank, as it wants to avoid inflation dropping to an extent that might threaten confidence in its ability to keep it at the target level.
In September, the retail sales volume declined by 0.1% on month, the statistics agency said in a separate release.
--With assistance from Mark Evans.
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