Sweden's GDP is expected to fall less than other European Union countries

Sweden's strategy to tackle the Covid-19 pandemic has sparked controversy. The Swedish government, led by Stefan Löfven, did not allow the economy to stop, resisting the strategy of confinement and social isolation carried out by other European Union countries. Now, when looking at GDP results for the second quarter, economists predict that Sweden will suffer less from the economic effects of the pandemic.

Prime Minister of Sweden, Stefan Lofven and Prime Minister of Portugal, António Costa | Henrik Montgomery / Reuters

Sweden has not implemented any strategy of confinement or social isolation to the population due to the Covid-19 pandemic, contrary to what has been done by the other member states of the European Union (EU). Now, according to Bloomberg, economists predict that the Swedish economy will contract less than most EU countries, precisely because it has not stopped the country.

The strategy was controversial, but it may now provide Sweden with an easier way to withstand the economic effects caused by the epidemiological outbreak of the new coronavirus. This Wednesday, Sweden will publish preliminary data on gross domestic product (GDP) between April and June and economists consulted by Bloomberg anticipate a contraction of 7%.

The extent of GDP contraction forecast for Sweden is still historic for the country of Scandinavia. But even so, it is a much lower drop than that registered by the European partners.

“The Swedish economy was not unscathed. […] But we believe that the drop in GDP in the second quarter would have been about a third of that observed in the eurozone, probably ”, defends Capital Economics economist David Oxley, quoted by Bloomberg.

Danish bank Nordea economist Torbjorn Isaksson, heard by the financial and economic information agency, is more cautious: "We don't know how the virus strategy will affect economies in the long run."

According to Eurostat's preliminary quick estimate, revealed on Friday, July 31, the eurozone's GDP is expected to have sunk 15%, and contracted 14,4% in the EU in the second quarter. The fall is expected to be the biggest since 1995, compared to the 3,1% and 2,5% contraction, respectively, in the euro area and in the EU, registered between January and March.

According to Eurostat, between April and June, Spain's GDP sank 18,5%, Portugal's economy fell 14,1% and in France the pace of the economy fell 13,8%.

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