A woman walks through the Kungstradgarden in Stockholm on May 8, 2020, amid the new coronavirus COVID-19 pandemic.
Jonathan NACKSTRAND | AFP
The Swedish economy expanded at a far superior rate than many of its European counterparts over the first three months of the year, data published Friday showed, following the government’s decision not to impose a full lockdown to contain the spread of the coronavirus.
The Nordic country’s statistics office reported gross domestic product (GDP), the broadest measure of economic health, grew at an annual rate of 0.4% in the first quarter.
Sweden’s GDP increased by 0.1% in the first quarter, when seasonally adjusted and compared to the final three months of 2019. The median forecasters in a Reuters poll of economists had expected to see a 0.6% contraction on a quarterly basis.
Confinement measures were brought in toward the end of the first quarter. As a result, economists expect countries to report an even sharper contraction over the next three months of the year.
It comes at a time when Sweden has the highest coronavirus death rate in the world.
What is going on in Sweden?
The Swedish government has recommended its citizens should stay and work from home, if possible. It has also brought in social-distancing measures, but people remain free to visit bars and restaurants, and students under 16-years-old continue to go to school.
The contrarian strategy is designed to allow some exposure to the virus to try to build immunity among the general population while protecting high-risk groups such as the elderly.
Sweden’s chief epidemiologist told CNBC last month that the capital Stockholm could be heading for so-called “herd immunity” within weeks, although there are doubts whether this has been achieved.
To date, Sweden has reported 35,727 cases of the coronavirus, with 4,266 deaths, according to data compiled by Johns Hopkins University.
To be sure, Sweden has recorded more Covid-19 infections and fatalities than all its Nordic neighbors combined — Finland, Denmark, Norway and Iceland.
People sit on terrace tables at cafe in Stockholm, Sweden, on Thursday, March 26, 2020. Sweden is starting to look like a global outlier in its response to the coronavirus.
Data published by Our World in Data shows Sweden currently has the highest daily death rate per capita of any country across the globe. As of May 28, Sweden reported, on a rolling average over the last seven days, 5.5 deaths per million per day.
Comparatively, Brazil has recorded 4.5 deaths per million per day on a rolling average over the last week, while the U.S. has reported 3 deaths per million per day since May 21.
Speaking at a press briefing earlier this month, Dr. Michael Ryan, executive director of the World Health Organization’s health emergencies program, described the herd immunity strategy as a “really, really dangerous calculation.”
Ryan added it was wrong for countries to think that such an approach would “magically” make their populations immune.
‘A year to forget’
Last month, Sweden’s central bank said the pandemic had damaged the country’s business and supply chains and warned many companies would be “hit hard,” with lots of people likely to lose their jobs over the coming months.
The National Institute of Economic Research, a respected think tank, said in a statement published April 29 that it believed Sweden’s economy would shrink 7% this year, with unemployment anticipated to rise to 10.2%.
“While Sweden’s economy has fared better than the worst-affected countries, as a result of its comparatively light-touch lockdown, it is still set for a year to forget,” David Oxley, senior Europe economist at Capital Economics, said in a research note published Thursday.
“We expect the decline in GDP this year as a whole to be in a similar ballpark to that in Germany,” he added.
German GDP fell at an annual rate of 2.3% in the first three months of the year. The German Statistical Office has forecast Europe’s growth engine will record a 10% plunge in GDP for the second quarter of 2020, dependent on the success of lifting lockdown measures.
The European Commission, the executive arm of the EU, expects the European Union’s growth rate will contract by 7.4% this year. That forecast reflects the worst economic shock since the Great Depression in the 1930s.