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talkpoliticsNearly a year after the coronavirus pandemic broke out, the Swedish government has decided to take tougher measures to fight the infection. It last week that the country's parliament passed a law providing, among other things, for the temporary closure of shops and malls. In the meantime, the Swedish economy has coped much better with the pandemic than most other European economies. According to EC experts, the Swedish GDP has contracted by only by 3.4% last year. And experts from Stockholm estimate even less than 3%. In the EU, only Lithuania and Ireland are doing better. And the forecast for Germany is a 5.6% contraction.
The Danish economy has suffered less than many others in Europe as well. According to the EC, the decline for Denmark will be about 4%. But during the pandemic, Norway, which is not a member of the EU, did best among the Scandinavian countries - in 2020, its GDP fell by only 2%. In March and April, the Norwegian GDP plummeted, but in the third quarter of last year, they even registered some growth by 4.6%.
This stability has also affected the capital markets. However, the Scandinavian countries have no clear recipe for this success that they could convey to others.
Sweden, the largest and economically strongest country in Northern Europe, has decided to go its own way in the fight against the pandemic. While most of Europe was stifled by lockdowns in the spring, life in Sweden continued almost as usual: factories, offices, shops and restaurants continued working with minor restrictions. The government only urged companies to provide conditions for their employees to work from home whenever possible.
This different strategy in Sweden has been sharply criticised abroad, mainly because of the high Covid death rates in the country - so far over 9,200 people have died of the virus out of a population of 10.3 million. In Germany, which has a population of 83 million, the death toll from the pandemic is much lower - about 46,000 so far. However, more lenient measures against the pandemic have done less damage to the Swedish economy than in other European countries.
Still, it's hard to say to what extent this is due to Sweden's different approach to the pandemic. There might be other factors, such as the strength and competitiveness of Swedish industry, the export-oriented nature of the economy and of course the lower spread of the virus at the beginning of the pandemic.
On the other hand, Sweden also benefits from being a leading force in digitalisation. In the EU index for digital economy and society, the country comes 2nd after Finland. Therefore, the transition to a home-office mode was not a particular challenge for Swedish companies. And schools and kindergartens still remain open.
The Swedish government expects the investment activity of the companies to start growing again this year. The same is valid for foreign trade: in 2020, the decline in exports was smaller than that of imports, which has greatly benefited the Swedish industry.
However, Sweden's different path in the pandemic has spared not only the economy but also the public coffers. It is true that government debt rose from 35% to 40% of the GDP last year, but it remains significantly lower than in other EU countries. For comparison: in Germany it is expected to reach 70% of the GDP, and in France and Italy it is even over 100%.
Denmark also boasts relatively low indebtedness - 45%, which is one of the lowest in the EU. Thus, Sweden, Denmark, and especially Norway, which has almost no government debt, have a major advantage over the heavily indebted countries of Southern Europe: they continue to have the financial leverage to stimulate the economy that highly indebted countries no longer have.
However, Sweden still has one major problem: the labour market. Unemployment there has reached 9%, twice as much as in Germany. However, the reason for this is not so much the pandemic as a strict legislation that makes redundancies virtually impossible and makes employers very cautious about opening new jobs.
The Danish economy has suffered less than many others in Europe as well. According to the EC, the decline for Denmark will be about 4%. But during the pandemic, Norway, which is not a member of the EU, did best among the Scandinavian countries - in 2020, its GDP fell by only 2%. In March and April, the Norwegian GDP plummeted, but in the third quarter of last year, they even registered some growth by 4.6%.
This stability has also affected the capital markets. However, the Scandinavian countries have no clear recipe for this success that they could convey to others.
Sweden, the largest and economically strongest country in Northern Europe, has decided to go its own way in the fight against the pandemic. While most of Europe was stifled by lockdowns in the spring, life in Sweden continued almost as usual: factories, offices, shops and restaurants continued working with minor restrictions. The government only urged companies to provide conditions for their employees to work from home whenever possible.
This different strategy in Sweden has been sharply criticised abroad, mainly because of the high Covid death rates in the country - so far over 9,200 people have died of the virus out of a population of 10.3 million. In Germany, which has a population of 83 million, the death toll from the pandemic is much lower - about 46,000 so far. However, more lenient measures against the pandemic have done less damage to the Swedish economy than in other European countries.
Still, it's hard to say to what extent this is due to Sweden's different approach to the pandemic. There might be other factors, such as the strength and competitiveness of Swedish industry, the export-oriented nature of the economy and of course the lower spread of the virus at the beginning of the pandemic.
On the other hand, Sweden also benefits from being a leading force in digitalisation. In the EU index for digital economy and society, the country comes 2nd after Finland. Therefore, the transition to a home-office mode was not a particular challenge for Swedish companies. And schools and kindergartens still remain open.
The Swedish government expects the investment activity of the companies to start growing again this year. The same is valid for foreign trade: in 2020, the decline in exports was smaller than that of imports, which has greatly benefited the Swedish industry.
However, Sweden's different path in the pandemic has spared not only the economy but also the public coffers. It is true that government debt rose from 35% to 40% of the GDP last year, but it remains significantly lower than in other EU countries. For comparison: in Germany it is expected to reach 70% of the GDP, and in France and Italy it is even over 100%.
Denmark also boasts relatively low indebtedness - 45%, which is one of the lowest in the EU. Thus, Sweden, Denmark, and especially Norway, which has almost no government debt, have a major advantage over the heavily indebted countries of Southern Europe: they continue to have the financial leverage to stimulate the economy that highly indebted countries no longer have.
However, Sweden still has one major problem: the labour market. Unemployment there has reached 9%, twice as much as in Germany. However, the reason for this is not so much the pandemic as a strict legislation that makes redundancies virtually impossible and makes employers very cautious about opening new jobs.
