Swedish export growth is slow, but retail is driving for the Swedish GDP.
HUI Research believes retail growth for 2014 land at 3.0 percent both this year and next. But this year’s developments for durable goods might slow down.
“It is a challenge for durable goods to show strong performance also this autumn “, said HUI Research CEO Lena Larsson.
According HUI Research’s economic outlook presented on Tuesday the situation remains stable in the Swedish retail. However, tougher comparatives are waiting in the fall, especially for durable goods that so far this year have met relatively weak comparatives.
This year, the trend in durable goods has been stronger than the trend in grocery stores. Durable goods trade during January-August grew by 4.2 percent, while consumer goods trade grew by 1.8 per cent.
Durable goods like furniture and building materials, for example, benefited from the increase in housing investment.
Weak global demand means that Swedish exports are stalling.
HUI Research lowers the outlook for exports and thus decreases GDP slightly from 2.4 to 2.0 per cent this year.
Household consumption, however, is stable and provides strong support for growth in the Swedish economy.
HUI’s forecast is that household consumption increases by 3.0 percent in 2014 as well as 2015 since the prospects for this are overwhelmingly positive. However, 2015 is not likely to offer any income support from politicians.
Amortization requirements might be introduced, in which case it will reduce household consumption slightly. Given that the economy is gradually strengthened during 2015, however, the historically high savings rate start to decline, which then supports consumption.
The pattern observed in previous years, where durable goods has overtaken grocery in growth rate, persists. Although durable goods so far this year already increased by 4.2 per cent is the HUI forecast for continued growth for 2014 as a whole, landing at 3.0 percent. Why the prognosis is not raised is explained by the strong comparatives waiting in the autumn and puts pressure on the growth rate. In 2015, durable goods are expected to be shifting up slightly and increase by 3.5 percent.
“In the autumn of 2013, durable goods had a turnaround, and it is a challenge to also this autumn show strong performance. So far this year we have compared the numbers with a pretty weak period last year, which has made it easier to show good growth figures, comments Lena Larsson CEO at HUI Research.
In food retailing, the rate of increase slowed somewhat during the past six months, so the forecast for the grocery earlier this year is lowered from 3.0 to 2.5 percent in current prices.
HUI Research estimates that grocery stores will increase by 2.5 percent both this year and in 2015, and total retail sales are expected to increase by 3.0 percent in current prices in 2014 as well as by 2015.
This scenario assumes that the political uncertainty eventually clears up.
HUI Research economic outlook for Sweden:
|Daily consumer goods||2.7||2.5||2.5|