Sweden's economy performed much better than expected in the first quarter of the year, boosted by strong exports, final GDP data published by the Statistics Office on Tuesday showed.

Gross domestic product expanded 0.6% compared to the previous quarter and 0.8% compared to the same quarter a year earlier.

Flash figures published in April had put growth at 0.2% compared with the fourth quarter and 0.3% compared to the first quarter of 2022.

Before today's figures, most analysts - and the central bank - expected the economy to contract overall this year as the cost of living crisis and higher rates hit consumers and businesses alike and the outlook remains uncertain.

Recent data has been robust, with employment holding up and retail sales increasing. On the other hand, housing starts fell around 50% in the first quarter and many consumer-oriented businesses are struggling.

Speaking on Monday, central bank Deputy Governor Per Jansson described the economy as "two-speed", making the Riksbank's task in setting rates all the more difficult.

The central bank has jacked up rates over the last year, but now expects to slow the pace of hikes as inflation starts to come down and households feel the pinch from higher interest rates.

It raised the policy rate to 3.5% in April and forecast another quarter point hike to come in either June or September before it takes a pause.

(Reporting by Simon Johnson; editing by Niklas Pollard)