Source: https://www.businessinsider.com/coronavirus-sweden-gdp-falls-8pc-in-q2-worse-nordic-neighbors-2020-8
Despite having some of the most relaxed lock-down measures out of many major European countries, Sweden has seen a fall in its GDP by 8.6% in Q2. Comparing to its other neighbors of Denmark at -7.4%, Finland at -3.2%, and Norway -7.1% from a timeframe one month earlier.
Sweden famously did not pursue a nationwide lock-down, and as a result was hit quite hard by the virus and now is facing more deaths as well than its neighbors. Sweden's chief epidemiologist Anders Tegnell did state that the reason for avoiding the lock-down was out of hopes to create a society in which was able to adapt to a more long term plan to remain healthy, and not to boost economic activity. Now facing both a high death toll and a hurting market, Sweden is looking for answers. There are fingers being pointed at less foot traffic in stores and outside their homes, others that income from tourism and exports are falling. At this point, Sweden will continue their more relaxed Covid measures, putting it on the common sense of their people to help fight the virus.
What is your opinion on this strategy to both fight the virus and hopefully maintain economic activity?
I'm not epidemiologist, so I can't speak for the efficacy of Sweden's strategy as a means of containing the virus, but from an economic standpoint it is not really surprising GDP declined so substantially. Even if every Swede continued "normal" economic activity, GDP would still decline because of supply chain shocks, decreased tourism, etc. But this ideal scenario is not the case. Worries about the virus and future economic performance may cause Swedes to limit spending and thus decrease aggregate demand.
ReplyDeletePerhaps if Sweden is successful at its "long lasting" approach to virus prevention, the Swedish economy will, in the long-run, prove more resilient then countries with more strict lock-down measures.
Correction: "I'm no epidemiologist".
ReplyDeleteCorrection: "Prove more resilient than countries".
Ii believe that since they did nothing initially the shock of a lock down would be very hard on the economy of Sweden. They will have to stick to their guns and continue to rely on common since because I think it would be really hard for the citizens to accept a lock down now. If this work I do believe that their economy would be a lot more adaptive then other countries
ReplyDeleteWhen this global pandemic hit, countries were unsure of what to do. It is interesting to see now how countries economies are being affected based on the different decisions they made. Sweden's affected economy could also be a cause of their neighboring countries shutting down, since Sweden would naturally trade with them. In the long run, it could have been worse for Sweden's economy if they shutdown because they would have missed out on the boost from people still working.
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