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Thanks to Sweden’s special roadmap strategy, for the moment, it appears to have escaped the cronavirus epidemic with a relatively mild decline. However, experts say that by the end of the year, the Swedish economy could fall into a severe recession, while far more deaths have been reported than in neighboring countries.
Sweden has chosen a separate path compared to other European countries to combat the Covid-19 epidemic. No restrictions were imposed as severe as in several European countries, and as a result, the Swedish economy did not perform as poorly in the first quarter as other European countries.
However, the advantage may be only momentary, and although it does not appear at first glance, it was born at the cost of serious sacrifices. The serious victim is the large number of deaths at Covid-19 in the Scandinavian state, according to yesterday’s statistics at 3,225. Although this number does not seem high in absolute terms, if we look at the number of deaths per million people, according to statistics, Sweden ranks ninth with 319 people, for example, ahead of the United States.
In the middle of last week, Anders Tegnell himself, a leading epidemiologist at the Swedish Health Authority, considered the father of the Swedish defense model, also said the number was terribly high, Newsweek writes. The expert was not convinced before defending without severe restrictions is the best method, and the country’s defense strategy is still under review.
At the same time, the economy is showing results for now, the Financial Times notes in its summary. Based on data released last week, the Swedish economy certainly performed much better than other Europeans in March, with an average rate of decline in the EU reaching 3.8 percent in the quarter, compared to just 0, 3 percent in Sweden. However, economists say Sweden is unlikely to be affected by the recession for the rest of the year. The decrease in the country’s GDP could reach 6.8 percent this year, according to the forecast of the European Commission.
The forecast of the country’s central bank, the Riksbank, is even more pessimistic. According to them, the recession rate could reach 7-10 percent, while the unemployment rate could jump to 9-10.4 percent, which is a very approximate number for a Scandinavian country.
It would be premature to say that we did better than others. In the end, we believe Sweden will come out of this more or less than the others, Christina Nymen, chief economist at Handelsbanken and former vice chairwoman of the Riksbank monetary council, told the newspaper.
One reason for this is that the Swedish economy is small and very open with a strong manufacturing industry. Volvo’s truck and car factories have also been forced to close for several weeks. Not because of the situation in Sweden, but because there have been serious disruptions in supply chains due to the closure in other countries. Even in the 2008 crisis, direct damage to the Swedish economy was relatively small, but the country’s economy suffered more than the recession average, Nyman said.
And despite the fact that the closings were not as drastic as in other countries, voluntary compliance with the distance measures still led to a large drop in turnover in the hotel and retail industry. Capital Oxics expert David Oxley said the relatively good first-quarter GDP figure was due not only to March, but also to above-average figures for January and February.
Swedish bank SEB forecasts an expected slowdown in the Swedish economy of 6.5 percent, in line with the expected slowdown in Germany and the UK, while the economies of neighboring countries Norway and Denmark, which have introduced restrictions, are expected to drop between 9 and 10 percent.
The Riksbank, unlike many other central banks, did not try to help the economy by cutting interest rates, but by securing the supply of credit. If people stay home, it is difficult to be encouraged by the cuts in interest rates. I can not say if in the end we will improve with all this. This will be decided over time, Stefan Ingves, the governor of the central bank, told the British newspaper.
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