Unlike most countries, Sweden never closed during a coronavirus pandemic, which kept companies largely operating, although the economy appears to be badly affected.
Under the controversial Scandinavian approach to the virus, cafes, bars, restaurants, and most businesses remained open, as did schoolchildren under the age of 16, while urging people to follow elimination and social hygiene guidelines.
Whatever the hope that this policy will mitigate the economic blow seems now shattered.
“As in most countries in the world, there will be a record downturn in the Swedish economy in the second quarter,” said SEB economist Olli Holmegren.
He told AFP that he is likely to recover in the latter part of the year, but “we hope it will be a long time before the situation returns to normal.”
In fairness, Swedish officials insist that their strategy has always been directed at public health, and not specifically at saving the economy.
The idea was to make sure that hospitals can cope with an outbreak and protect the elderly and vulnerable groups.
Sweden has been successful in the past, but admitted failure in the latter, with more than three-quarters of virus deaths occurring among nursing home residents and those receiving home care.
“When we decided what steps should be taken to prevent the spread of the virus, we had no financial considerations. We followed the advice of our (public health) experts on this issue,” Finance Minister Magdalena Anderson told reporters late in the month. may. .
However, authorities acknowledge that keeping businesses open was also part of broader public health considerations, as high unemployment and weak economies lead to deteriorating public health.
Sweden, a country with a population of 10.3 million, has reported 4,639 Coved 19 deaths as of Friday.
This gives it one of the highest virus death rates in the world, with 459.3 deaths per million people, four times more than in neighboring Denmark and 10 times more than Norway, which has imposed stricter detention measures.
At first, the dense Swedish export economy seemed to be in good shape, with GDP already growing 0.1% in the first quarter.
But now the country is expected to follow the same path as most of Europe, with an economy that shrinks throughout the year 2020 and rising unemployment.
Low GDP, higher unemployment
In April, the government expected GDP to drop by four percent in 2020, compared to its January forecast of 1.1% growth.
Although the European Commission projected a Swedish contraction of 6.1% (compared to -6.5% for Germany and -7.7% for the euro area), the expectations presented by the Swedish Central Bank are more impressive: they expect a 10% drop in GDP.
Some economists argue that Swedish growth is picking up in the early second half of 2020, but the finance minister warned that things could get worse before improving.
Before the crisis, Sweden’s labor market was in good shape, with strong job creation and a lower unemployment rate.
Now, the government expects the unemployment rate to be 9 percent for 2020 and 2021, compared to 6.8 percent in 2019.
It is growing 3.5% in 2021.
Sweden’s sharp recession largely explains its dependence on exports, which account for around 50 percent of GDP.
“70% of Swedish exports go to the European Union. The closures in Germany, the UK, etc. are expected to significantly affect Swedish exports,” the government said.
In March, some of the country’s largest companies, such as automaker Volvo Cars and truck maker Scania, stopped production in Sweden.
This was not due to local restrictions, but to supply chain problems in Europe and the rest of the world. Its activities have resumed since then.
Meanwhile, consumption fell 24.8% between March 11 and April 5, according to a study by four economists at the University of Copenhagen.
Neil Johansson, one of the four economists: “Sweden pays the same price (as Denmark) for a coronavirus. The explanation is that when you are in a fatal crisis, consumers pay emergency brakes, whether the restaurants are closed or not ” He told the Swedish newspaper Helsingborg Dagblad.
In mid-March, the government announced $ 32 billion in measures to help businesses.
Since then, they have been assigned