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STOCKHOLM : Sweden and Finland, posting soaring economic growth on Wednesday, appear to be making a spectacular recovery from the deep recession their export-reliant economies experienced during the global financial crisis.
"It's pretty fair to say that the sun is shining over the Swedish economy currently," Swedish Finance Minister Anders Borg told reporters after the latest figures were published.
Economic growth in the Scandinavian country accelerated in the second quarter by 4.6 percent on a 12-month comparison, and by 1.9 percent compared to output in the previous quarter, according to revised numbers from the national statistics agency.
Sweden, which is less than two weeks from general elections, thus hit its highest growth rate since 2000.
The latest gross domestic product (GDP) figures "probably mean that you actually have to compare Sweden to Asia to see figures of the same magnitude. Very few European countries are above three percent and even fewer are above four percent," Borg said.
Although the turn-around is closely linked to a strengthening global economy that has improved the climate for manufacturing and exports, analysts say the Nordic recovery also rests on strong fundamentals such as healthy public finances and strong consumption.
The new numbers place Sweden's economy at the very forefront of the European crowd, alongside Germany, Poland and Slovakia, and far ahead of the average European Union second-quarter growth rate of 1.0 percent compared to the previous three-month period and 1.9 percent year-on-year.
"Of course, we've had a larger decline last year in particular in the manufacture industry and (now) we're bouncing back," explained Olle Olmgren, an analyst with the SEB bank.
"But a more underlying factor is that the domestic demand is very firm, with households that have strong balance sheets, unemployment falling, increase of consumption and the same is true for public finances," he told AFP.
Contrary to many other EU countries that face towering debt and harsh austerity measures, the Swedish government has benefited from strong public finances to put in place economic stabilisation mechanisms and plans to continue to strengthen the country's famous welfare state, Olmgren pointed out.
Sweden's eastern neighbour Finland, which long struggled with one of the eurozone's deepest recessions, also posted strong second-quarter growth figures Wednesday, with its gross domestic product swelling 1.9 percent during the quarter, according to Statistics Finland.
The data also showed the economy grew by 3.7 percent year-on-year, according to the statistics agency, which revised sharply upwards its GDP numbers for the first quarter from a contraction of 0.4 percent to growth of 0.1 percent.
Chief economist for Handelsbanken Finland, Tiina Helenius, told AFP the revised data for the preceding quarters was particularly interesting since it meant Finland had not fallen back into recession at the beginning of the year as previously indicated.
The economy had actually been improving in step with its Nordic neighbours, she said.
Last week the International Monetary Fund published a report on Finland's financial health, recommending that the country start scaling back recovery programmes at least by the start of 2011.
Helenius however cautioned that Finland was still recovering and should be wary of jumping too quickly onto the budget-balancing wagon.
"There's this idea to pull back recovery initiatives and balance the budget, but if everyone starts doing this at once, it could have a negative effect," she said.
Pekka Tiainen, the chief economist for the employment and economy ministry, meanwhile said that although the country's economy seemed to be moving in the right direction, the second quarter figures might be deceptive.
"The focus on rising exports is a little overrated, because imports have increased about the same amount, so the difference isn't too significant," he told AFP.
In the rest of the Nordic region, Denmark also reported better-than-expected second-quarter numbers, with economic growth of 1.0 percent for the three-month period and of 2.8 percent compared to a year earlier, but its forecasts remained at a modest 1.4 GDP percent growth for this year and 1.8 percent in 2011.
Norway meanwhile posted less spectacular growth figures -- just 0.5 percent for the second quarter and 1.6 percent year-on-year, but the country had also fallen far less dramatically during the financial crisis, largely due to its massive oil and gas resources.
Norway last year became the first European country to begin raising interest rates again after the crisis, followed by Sweden in July.
- AFP/ir
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