• Swedish riksbank likely to cut rates in September

Sweden’s economy shrank unexpectedly in the second quarter as exports fell, weighed down by economic weakness in the EU.

Gross domestic product contracted 0.1 percent in the three months through June, after growing 0.6 percent in the prior quarter, preliminary data from Stockholm-based Statistics Sweden showed. Annual growth was 0.6 percent, slowing from 1.7 percent. The economy was seen expanding a quarterly 0.1 percent in a Bloomberg survey of 12 economists.

“Despite the weaker-than-expected figures, this will not change the outlook for monetary policy,” Torbjörn Isaksson, chief analyst at Nordea Bank AB, told Bloomberg. “The first and the second quarter should be seen together, showing some growth in the first half of the year. Given the favorable conditions for households, we should see a healthy consumption growth going forward, and indicators suggest that exports should improve gradually.”

The Riksbank and Nordea both forecast 1.5 per cent GDP growth for Sweden in 2013.

Finance Minister Anders Borg recently said there is more downside than upside risks to the forecasts and that “there’s a significant risk that things get messy in the financial markets this autumn, that money simply rushes out of weaker countries in Europe back home to the U.S.”