The slowdown in the growth rate of the Swedish construction market may cause issues for Estonian exporters, SEB analyst Mihkel Nestor said on Friday.
According to an estimate by SEB, the contribution of residental construction to Sweden's GDP growth will decline from the present one percent to zero by 2018; in 2019, it is expected to decrease further to -0.5 percent. A stagnation in construction rates in Sweden may in turn cause problems for first and foremost the Estonian wood and furniture industry.
This year, 24 percent of Estonian exports of prefabricated houses, 37 percent of rough wood, and 22 percent of mattresses and beds have gone to Sweden.
Growth in the Swedish construction sector is decelerating primarily as a result of a price correction on the property market.
Sentiment on the Swedish housing market deteriorated sharply in November, according to SEB's House Price Index (HPI), which measures the share of households expecting home prices to increase versus decrease in the coming 12 months. The HPI declined by 39 points, from an elevated 50 in October to just 11 in November, marking the second largest drop in the history of the series; the largest drop was recorded ten years ag, in the midst of the financial crisis in November 2007, when the indicator dropped by 47 points.
At current levels, the indicator confirms a slowdown in the Swedish housing market but does not yet signal outright declines. This is in line with recent trends in home price data.
Editor: Aili Vahtla