STOCKHOLM, July 30 (Reuters) - Strong exports drove
a stellar performance for Sweden's economy in the second quarter, shrugging off the effects of the euro zone debt crisis and supporting the central bank's view there is no need to cut interest rates.
Sweden's export-driven economy has shown surprising strength at a time when mainstream European countries including France and Italy are heading into what threatens to be a prolonged downturn.
Growth of 1.4 percent in the second quarter topped forecasts by more than a full percentage point as did an expansion of 2.3 percent from a year earlier, the statistics office's first estimate for the April-June period showed.
Exports grew 1.7 percent from a year earlier.
'This sends a message of strength about the Swedish economy and the crown is strengthening on this,' said Michael Grahn, economist at Danske Markets.
'We had expected a rise but this is even stronger. The big surprise is net exports.'
The figures compared with forecasts for 0.3 percent growth in the quarter and 0.8 percent from a year earlier, according to a Reuters survey of economists.
Sweden's robust economic growth has enhanced its status as a safe-haven for investors from the euro zone's troubles and the Q2 data helped the crown to a record high around 8.3965 to the euro.
Yields on two-year debt rose to 0.930 from 0.882 percent.
Sweden has so far avoided the worst effects of the euro, crisis though exporters like truck maker Volvo, are now seeing orders slow as recovery in the U.S. stalls and the pace of growth in China declines.
Consumers remain relatively upbeat, the labour market is solid, government finances strong and banks and companies have limited exposure to troubled southern European countries.
The Nordic economy grew a revised 0.9 percent in the first quarter compared with the previous three months and 1.5 percent year-on-year after a brief, but sharp, contraction in the final three months of 2011.
That all throws into doubt the Riksbank's own forecasts for growth of just 0.6 percent overall this year.
The central bank cut rates late last year and again in February, but has kept borrowing costs unchanged since then.
The bank's main scenario is for rates to stay at the current 1.50 percent level for the coming year before rising as economic recovery takes hold.
But most analysts had expected the Riksbank to be forced into further policy easing as the euro zone's troubles ate into growth and the bank's last meeting at the start of July opened the door to a cut later this year should the crisis worsen.
'We had a seventy percent probability that the Riksbank would cut rates in September, but at first glance (after the GDP figures), now it is more 50/50,' said Olle Holmgren, economist at SEB.
Anders Brunstedt, economist at Handelsbanken, said it pushed out his expectations for when the bank might cut.
'This supports our view that the Riksbank will not lower (rates) in the near future. We stick to our view for a slowdown and an interest rate cut further ahead.'
(Reporting by Stockholm Newsroom) Keywords: SWEDEN GDP/
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