Sweden Hails Covid Plan as Economic Slump Better Than Feared

(Bloomberg) --

Sweden's finance minister says the country's light-touch lockdown may have contributed to a less severe contraction in the economy.

Speaking in an interview in Stockholm, Finance Minister Magdalena Andersson said the decline in second-quarter GDP was “slightly less than we expected in June and it's less than in many other countries.”

But the controversial virus strategy has also coincided with one of the world's highest death rates, relative to population, and the government has admitted more should have been done at the outset to test people and protect the elderly.

Andersson says economic considerations haven't played a part in the Swedish approach -- which has relied on the advice of the national health agency, spearheaded by state epidemiologist Anders Tegnell -- and cautioned, “It's too early to draw any conclusions about the economy and the pandemic.”

The finance minister also cited her country's sensitivity to the broader economic cycle in shaping how the recovery evolves from here. “We're an export-dependent country so we are of course very affected by what happens in other parts of the world,” Andersson said.

“The road back to the level of activity that prevailed before the outbreak of the epidemic will be long and difficult at least until a vaccine is available.”

--SEB's Karl Steiner

Sweden's industry structure is an important factor in assessing how the country measures up against its Nordic neighbors, according to Andersson. Denmark, for example, is expected to see a similar economic contraction despite a strict initial lockdown and substantially fewer fatalities.

“Look at Denmark, a big exporter of pharmaceuticals and food,” Andersson said. “Of course they are less exposed to a big drop in the world economy than we are.”

Read More: Sweden's Economy Posted Record Slump During Pandemic Peak

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