Stockholm (AFP) – Sweden’s economy shrank 8.6 percent in the second quarter, the nation’s statistics service said Wednesday, even though the country never imposed strict coronavirus lockdowns seen elsewhere in Europe.
The fall in gross domestic product (GDP) when compared to the second quarter of 2019 came in at 8.2 percent.
According to Statistics Sweden, the downturn represented the largest drop since at least 1980, which is as far back as comparable statistics are available.
Sweden’s government is expecting a six percent fall in GDP for the year as a whole — the largest since 1940.
The GDP figures presented are preliminary, with an update expected on August 28, and though the drop was significant, analysts had been expecting something in the ballpark.
“The sharp contraction in the Swedish economy… confirms that it has not been immune to COVID, despite the government’s well-documented light-touch lockdown,” David Oxley, senior economist at Capital Economics, said in a note.
“Nonetheless, the economic crunch over the first half of the year is in a different league entirely to the horror shows elsewhere in Europe,” Oxley added.
The eurozone’s GDP tumbled 12.1 percent in the second quarter, dragged down by even steeper falls in Spain, Italy and France where lockdowns hit the tourism sectors particularly hard.
No lockdown
Unlike most countries in Europe, Sweden never imposed a so-called lockdown during the coronavirus pandemic, largely keeping businesses operating. But as the country’s economy is dependent on exports, the fallout from the global downturn was nonetheless swift.
Swedish officials have insisted their strategy was always aimed at public health, and never specifically at saving the economy.
However, the approach has been the subject of controversy, especially as the country’s reported death rate rose well above that of its neighbours.
On Wednesday, Sweden reported a total of 81,540 confirmed cases and 5,760 associated deaths, one of the highest per capita death tolls in the world.
In recent weeks, some reports have shown that the Swedish strategy spared the country’s economy from the worst effects of the pandemic, but economists are still cautious.
“I dont think the strategy can explain the GDP difference between Sweden and other countries,” John Hassler, an economist at Stockholm University, told AFP.
“I think it has more to do with industry structure of each country than with strategy,” he added.
As an export dependent country, Sweden has suffered from the global downturn, but as tourism represents only a small part of the nation’s economy, it has also been protected from the worst effects suffered by southern Europe.