Data indicate rapid recovery: Without lockdown through the crisis: Sweden’s path seems to be paying off for the economy
Second wave, second lockdown? Many countries in Europe are struggling with rising case numbers, but do not want to stifle the economy again. Sweden waived a lockdown at the beginning of the pandemic – because of the economy. The controversial special route seems to have paid off for the economy.
At the beginning of the coronavirus pandemic, you often read that you couldn’t know afterwards whether you took the right measures – but you would quickly notice if they were wrong. In the end, there was a tough lockdown almost everywhere. Only Sweden did not want to go along with this strategy.
Public life was hardly restricted. The government and the country’s top epidemiologists have received heavy criticism for this. Nevertheless, they stuck to it: The Swedes did not want Corona to ruin their economy. However, the plan had a catch: like many other European countries, Sweden depends on trade with its neighbors. If the lockdown chokes their economy, Sweden will suffer too.
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That is why there were admissions on the Swedish side. Forecasts have been shortened or corrected downwards. In May, Finance Minister Magdalena Andersson announced that the Swedish economy will likely shrink by 7.0 percent in 2020. Only weeks before that, Andersson had assumed that gross domestic product (GDP) would fall by at best 4.0 percent.
Swedes are investing billions in the economy – and remain optimistic
Almost half a year has passed since then. And there are some signs that Sweden’s economy has actually fared a little better. The exchange rate of the Swedish krona provides a first indication. It did well against the euro. Despite a recent slide, the Krone is trading at EUR 0.0963, a good bit above the level at the beginning of the year.
In the summer months, the price even rose to 0.0979 euros. This is remarkable because the euro itself performed particularly well in the current year. The common currency has risen enormously against the dollar. This means that the Swedish krona is not only becoming more expensive because of a weak euro.
In other ways too, forecasts indicate that Sweden’s economy will recover from the corona shock faster than other economies. The government itself went to the news agency Reuters according to the latest from a GDP decline of 4.6 percent, and also announced that it would support the economy with a record budget.
“Economic policy is entering a new phase,” Treasury Secretary Andersson said in September. “It’s about a record-breaking budget to get the Swedish economy going again – 100 billion [Kronen]to pave our way out of the crisis. ”A total of 105 billion kroner – around ten billion euros – should benefit the economy through tax cuts and investments.
Sonderweg seems to save part of the economic output
With its forecast, the Swedish government is now slightly more optimistic than the International Monetary Fund (IMF). The IMF corrected its estimate for Sweden last up to minus 4.7 percent. For Germany’s economy However, the IMF expects a decline of 6.0 percent for 2020.
So Sweden actually seems to be doing better than the countries that are taking stricter measures against the pandemic. Although that broke too Swedish GDP in the second quarter by an unprecedented 8.2 percent compared to the same quarter of the previous year. The economy held up better than in Germany – in this country, output in the second quarter fell by 11.7 percent compared to the previous year. Based on these data and the forecasts, it seems that Sweden’s special path has saved a few percentage points of economic output.
“Many Swedish economic data surprised positively”
This also explains the strength of the Krone: “The Krone was not only able to benefit from the improvement in sentiment on the markets, but also from the fact that many Swedish economic data surprised positively in the first half of the year,” commented Commerzbank foreign exchange expert Antje Praefcke. This stirs up hopes that despite the close trade relations with the euro zone, which was in lockdown in spring, Sweden’s special route in the corona crisis could prevent worse.
Commerzbank is therefore sticking to the basic scenario for Sweden, which assumes a rapid recovery in the economy. With its GDP forecast of just minus 3.5 percent this year and an increase in output of 3.0 percent in 2021, Commerzbank is even more confident than Sweden and the IMF.
That doesn’t mean that things will really go that well for the Swedes. “As in most countries, the consequences of the economic downturn are likely to be felt for years to come,” noted Commerzbank, pointing out that the strong profits made the Swedish krona susceptible to setbacks. According to Reuters, other experts also warned against trying to identify the winners and losers of the Corona crisis too early.
Sweden pays a heavy price for its economy
And: It should not be forgotten how dearly Sweden bought it. With a total of 101,000 cases and a good 5,900 corona deaths, the numbers in Sweden are well below those in the Federal Republic, such as Data the US University of John Hopkins show. Broken down to the number of inhabitants, the pandemic is raging there much more intensely.
One Data aggregation According to Oxford University, at the height of the pandemic, Germany had fewer than three deaths per million inhabitants on a seven-day average, in Sweden it was almost ten. The case mortality rate in Sweden has also long been much higher than in Germany.
Sweden has explanations for the high death rate. State epidemiologist Anders Tegnell recently referred to the mild flu season of the previous year. Those risk groups and old people who did not succumb to influenza in the previous year are now being hit by the coronavirus. Tegnell appeals to the “Spiegel“According to a study that has not yet been scientifically verified.
Tegnell’s colleagues in neighboring Finland and Norway promptly expressed doubts about the declaration. It is therefore to be hoped that Sweden’s economy will really recover as quickly as the latest forecasts predict. Otherwise, the Swedes would have waived the lockdown completely in vain – and paid an immense toll for it, as the pandemic data testify.
In addition, there is still no country over the mountain – not even Sweden. As in Germany and many other European countries, the number of new infections in Sweden is increasing again after the relaxation in the summer months. The latest addition to the risk areas by the Robert Koch Institute in Germany testifies to this: for the first time this week, Swedish areas were added to the list.
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This is how FOCUS Online readers commented on this article:
- Sweden’s Corona Poker: The game has only just begun and is far from over. Sweden may have gambled too high in the end and will have to foot the bill for it. I would not be surprised if the corona virus taught the Swedes better, which I do not wish the Swedes to do.
- I increasingly envy the Swedes for their politicians. Solutions that work, without blind actionism. Unfortunately we are blessed for the most part with incompetent and unwilling politicians …
- Sweden without lockdown – favored by the low population density. A special path that has been bought at the expense of many dead.
Editor’s note: In an earlier version of the article, the exchange rate of the Swedish krona was incorrectly given too high due to a missing decimal place. This bug has been fixed.
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