Upbeat indicators suggest that the slowdown may have troughed in Q4 when GDP growth cooled to 0% (q-o-q). After unexpectedly increasing 1.9% (y-o-y) in January, retail sales soared by 3.5% in February. Domestic demand has remained resilient despite rising joblessness: the unemployment rate edged up to 8.5% in February.
The PMI for manufacturing climbed to a 20-month high of 52.1 in March, providing further evidence that growth momentum is returning to the export-dependent economy. The Riksbank this month elected to leave the repo rate unchanged at 1.0%.
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