A quick glance at the GDP growth might be a reason for suits in the financial sector to break out the champagne. Not so fast, caution some.
Harry Flam, the Director of the Institute for International Economic Studies at Stockholm University, told Radio Sweden that looking at the context and the real breakdown of the numbers shows that some of the growth does not truly reflect Sweden's expansion.
A good portion of the hefty figure, said Flam, has to do with companies, now feeling optimistic, building up their inventories – or stock -- again as they come out of the recession. Without this stockpiling, he said the GDP would have grown by only 4 percent, rather than 6.9 percent.
In fact, while Sweden's economy has been expanding, much of this is just regaining lost ground. Flam said that the country's economy has only now come back to where it was three years ago before the recession hit.
During an interview with Swedish Radio news on Tuesday, finance minister Anders Borg cautioned Sweden not to get over-confident, like Iceland and Ireland were before their economies crashed.
He said, "Above all, they lost control over the bank and housing sectors. It's important that our banks work well, but when that sector grows too big, it can threaten our own economic stability."
Flam said that Borg probably does not feel that Sweden is on the road to disaster, but that his statements could have been political. According to Flam, Borg wants to make sure government spending doesn't increase too much. But there's another reason.
"You want to be able to say that I was right when I warned about the dangers that might be lurking around the corner," Flam said.
Plus, Flam said that Borg is doing just what he should as a finance minister: being prudent.
Borg urges caution as economy grows
More and more signs indicate that Sweden's economy is keeping at a fast clip despite the global crisis, but Swedish finance minister Anders Borg warns the nation against becoming arrogant.