Restaurant in Gotland, Sweden
Photo: Martin von Krogh / Getty ImagesSweden's statistics agency has never before announced such miserable economic figures as these days. And never before have Sweden's fans been so happy.
The statisticians have reported that the gross domestic product fell by 8.6 percent in the second quarter. In normal times that would be a devastating slump. In Corona times, Sweden is almost a model state economically - compared to countries such as Germany (-10.1 percent), France (-13.8 percent), Spain (-18.5 percent) or the EU as a whole, their economic performance in the pandemic quarter from April to June probably dropped by almost 12 percent.
In the first three months of this year, when Corona started, Sweden performed better than the average. And so leading economists expect the Scandinavians to close the 2020 pandemic year with a much smaller minus than most other European countries.
It's a great success - but a dubious one. In relation to the many Covid-19 deaths, the country seems to be paying a high price for its relatively stable economic situation.
The global public has probably never followed the events in the far north as closely as this year, in this pandemic. Because Sweden took a different route. Those responsible around the state epidemiologist Anders Tegnell only recommended that citizens keep their distance and stay at home. However, they did not impose any national curfews or bans on contact, and kept schools, restaurants and shops open. To date there is no nationwide mask requirement.
The consequences of this policy seem to be devastating: 5,766 Covid 19 deaths have so far been officially registered. That is an enormous amount when measured against the size of the population. Sweden has around ten million inhabitants. The country has 40 percent more deaths per million people than the US and twelve times more than Norway.
Economically, it initially looked as if Sweden would face a similar decline as the other European countries despite its lax corona measures. Critics saw this as confirmation that the Swedish special route was also a wrong economic path. But now there are increasing indications that the country is doing better economically than most other European countries. Also because of its corona policy.
"The restrictions were not as strict as elsewhere, which partly explains the relatively mild cooling of the economy," says Robert Bergqvist, chief economist at SEB Bank, in an interview with SPIEGEL. Torbjörn Isaaksson, the Sweden analyst for the financial services provider Nordea, agrees: "Many shops and facilities were not closed for weeks and most people were able to continue doing their work." The motor of economic life, daily consumption and production, was not slowed down as much as in countries with a hard lockdown.
In addition to the lax corona policy, Sweden's economy also proved to be structurally well prepared for the crisis. First, one is not as dependent on tourism as southern European countries like Spain or Italy, says Bergqvist. Because many Swedish families have canceled the mandatory Mediterranean vacation this summer, the domestic industry is doing comparatively good business.
According to Bergqvist, industrial companies have also "done well". Companies such as the network supplier Ericsson, the car manufacturer Volvo or the pharmaceutical company AstraZeneca - which is involved in one of the most promising corona vaccine projects - have presented surprisingly strong figures in the past few weeks. The leading index of the Stockholm Stock Exchange is almost as high as it was at the beginning of the year, when no one suspected a pandemic.
The companies have benefited from the high level of digitization and the good IT infrastructure in the country. Many people in well-paid jobs work on the computer anyway, "and they have been used to working from home for a long time," says SEB economist Bergqvist. So economic activity was not slowed down so much. And since many children were allowed to continue attending school or kindergarten, the parents were able to continue working at home quite undisturbed.
Those who temporarily had nothing more to do were also supported by the state: with a short-time work model similar to that in Germany. "The workers received around 90 percent of their income and the government paid 70 percent of the costs," explains Nordea analyst Isaaksson. There were also grants and tax breaks for companies in need.
The public sector could afford these subsidies: Before the crisis, the national debt was only around 35 percent of annual economic output. In some southern European countries this rate is three, four or five times as high.
Two percent growth possible
The economic prospects for the Scandinavian country are relatively good. SEB-Bank predicts two percent growth for the third and fourth quarters. If this forecast is correct, Sweden could become one of the few countries in Europe to avoid a recession. According to a common definition, a recession occurs when economic output shrinks for two quarters in a row.
For 2020 as a whole, Bergqvist, Isaaksson and the Swedish Central Bank are forecasting an economic decline of between 3.5 and 4.5 percent. With this, too, your country would get off lightly - compared to many other European countries.
However, the forecast is still shaky. Swedish industry exports around three quarters of its goods to other EU countries. "If there is a new problem in the European economy, it will also have consequences for Sweden," warns Berqvist. And a possible second epidemic wave is not taken into account in the forecasts of the SEB, Nordea and the central bank.
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