ActivTrades: Lessons to learn from the Swedes softly-softly approach

Pictured: Social distancing at Stortorget Square, in the heart of Stockholm.

Pictured: Social distancing at Stortorget Square, in the heart of Stockholm.

ActivTrades Weekly

By Ricardo Evangelista


While most countries around the world reacted to the COVID pandemic by imposing strict social distancing measures, often requiring the shutting down of large sectors of their economies, one nation stands out, having decided to take an alternative approach. I am of course referring to Sweden. Authorities in Stockholm kept businesses, schools and borders open throughout the peak of the crisis, while recommending social distancing as well as working from home whenever possible, relying on citizens’ civic conscience rather than using draconian legislation to contain the spreading of the disease. Did this light touch approach work?

While still raging through most of the Americas, the worst of the pandemic has, for now, passed in Europe, with numbers of new infections and fatalities considerably down from where they were during April and May. Meanwhile, statistics related to the second quarter economic performance have been published. The numbers are staggering: The US economy shrank 32.9 percent during April, May and June, comparatively with the same period in 2019. In the European Union, the average contraction was in the order of 12 percent, with Spain, the worst performer, seeing its economy shrink by 18 percent. Interestingly, Sweden’s gross domestic product fell by “only” 8.6 percent during the second quarter; comparatively better than the United States or the European Union averages, but roughly in line with its formally locked-down Scandinavian neighbours.

On a first analysis it may appear the Swedes got it right, as their economy decline was less pronounced than that of the US and most European countries. However, the numbers may hide several interesting nuances. With a second wave of the pandemic being increasingly likely, potentially creating the need for new lockdowns, uncovering such facts will helps us to frame the economic and human outcomes of the alternative stance chosen by the Nordic state.

The Swedish economy has a smaller dependence on tourism, in the order of 2.6 percent, than many other countries; leisure and travelling are among the sectors more affected by the pandemic, which to a large extent explains the more pronounced contractions verified in economies where tourism’s significance is greater. On the other hand, Sweden is one of the most advanced digital economies in Europe, home to global tech businesses such as Ericsson and Spotify; the fact that tech is one of the sectors less exposed to the pandemic fallout could also help explaining the country’s comparatively milder recession.

In Sweden, 40 percent of households have single occupancy, which represents a form of social distancing already in place, in contrast to Southern Europe where the cohabitation of several generations of the same family is common. However, despite this head start, the country ended-up with one of the highest COVID-related death rates in the world, at 565 fatalities per million, roughly 20 times that of its neighbours Norway, Finland and Denmark who, incidentally, are all expected to deliver a second quarter GDP performance similar to Sweden’s.

For now, it appears that authorities in Stockholm ended up paying an unnecessarily high human cost for some economic gains that may have been achieved anyway, given the idiosyncrasies of its economy.


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