Sweden's economy weaker than expected in second quarter

STOCKHOLM, July 29 (Reuters) - Sweden's gross domestic product grew by just 0.1% in the second quarter, preliminary data from the Statistics Office showed on Tuesday, undershooting most forecasts and increasing the probability of more fiscal and monetary stimulus in the coming months.

Economists polled by Reuters had on average expected GDP to grow by 0.3% in the April-June quarter from the January-March period.

Compared with the same quarter last year, GDP expanded by 0.9% in April-June, lagging a poll forecast of 1.1%.

Sweden's economy shrank 0.2% in the first quarter against the previous three-month period.

Growth has stalled amid worries about U.S. President Donald Trump's on-again, off-again tariff policies, with gloomy households wary of increasing spending despite a series of rate cuts and businesses holding off on investment.

"It raises pressure on both the central bank and the government ... to give the economy a push forward," SEB economist Robert Bergqvist said in a post on X.

The central bank cut its key rate to 2.00% from 2.25% on June 18 and left the door open to more easing before the end of the year to help boost the economy.

However, a bounce in inflation and a weaker crown currency since then have clouded the outlook for rates. EURSEK=D3

The crown traded largely unchanged on Tuesday at 11.14 against the euro.

The central bank will announce its next interest rate decision on August 20, and the government is due to present its fiscal budget for 2026 to parliament on September 22.