Coronavirus : in a Sweden not confined to, the economy is suffocating

Coronavirus : dans une Suède pas confinée, l’économie aussi suffoque

Measures to combat the novel coronavirus more flexible but an economy when even the sentence : in Sweden, shops and businesses have beautiful be in the majority that remain open, the economy is going to acknowledge the coup in the face of a health crisis of unprecedented proportions.

“As in most countries of the world, the Swedish economy will experience a decline record in the second quarter (…) it will take a lot of time before the situation normalizes, provides for the AFP Olle Holmgren, economist at SEB bank.

Unlike devices imposed in the rest of Europe, Sweden has maintained open cafes, bars, restaurants and businesses, asking everyone to ” take its responsibilities “. It has not confined its population.

The strategy aimed, according to the government, not to rescue the economy, but to support the public health system – a high unemployment rate and an economy to the penalty would lead to a weakening of the latter.

“When we decided to take measures to stop the spread of the virus, we had no economic consideration,” assured the end of may Magdalena Andersson, minister of Finance of the government of centre-left Swedish.

Since the beginning of the crisis, more than 40 000 cases of coronavirus have been registered in the country and 4 542 people died.

The mortality rate among the highest in Europe, with 449,7 deaths/million inhabitants, four times more than in neighbouring denmark and up to ten times more than in Norway. And the economy depends largely on exports, trinque also.

In spite of a slight increase in the gross domestic Product (GDP) (0.1 %) in the first quarter (the effects of the crisis appeared at the end of the quarter) the norse kingdom should follow the same trajectory than most of its european partners : the decline of the GDP in 2020 and rising unemployment.

Plunge

On 15 April, the government forecast a decline of 4 % of GDP by 2020, against a growth of 1.1 % envisaged in January, at the dawn of the epidemic.

And if the european Commission is forecasting a contraction of 6.1% this year for the country (against -6,5 % for Germany, -8,3 % for France and -7,7 % for the euro area), the forecast darkens further to the side of the Bank of Sweden for which the contraction could be up to 10 %.

Some economists predict a rebound in growth in the second half, but the minister of Finance has warned that the reduction could be higher than estimated and lead to more unemployment.

Before the crisis, the market of the Swedish employment was flourishing between a constant increase of the active population, creation of jobs and hours worked, combined with the drop in the number of unemployed.

Now, the government is considering an unemployment rate of 9 % in 2020 and 2021, compared to 6.8 % recorded last year.

As for growth, it is expected to rise in 2021, to 3.5 %, according to government forecasts.

Export-dependent

This rout is mainly due to the dependence on exports, which correspond to around 50 % of the GDP of sweden.

“70 % of exports from sweden to the european Union. Plant closures in Germany, the United Kingdom (…) should have significant effects on exports in sweden “, stressed Stockholm.

In march, the biggest names in the industry, as the automotive manufacturer Volvo Cars or heavy trucks Scania, had announced the suspension of their production in the country due, not to local restrictions, but because of the disruptions in the supply chain elsewhere in Europe and in the world. The activity has since resumed.

The consumption she fell 24.8 % between 11 march and 5 April, after a study conducted by four economists at the University of Copenhagen.

“Sweden pays the same price (for Denmark) in the face of the pandemic, ( … ), when one is plunged in a crisis, the consumer activate the emergency brake. That the restaurants are closed or not, ” says Niels Johannesen, one of the leaders of the study, quoted by the daily newspaper Helsingborgs Dagblad.

To counter the effects of the crisis, the government had announced as early as march 16, a series of measures for businesses of up to 28 billion euros. Since then, the budget has increased and the support measures were expanded, covering (among other things) a reduction in employers ‘ contributions, the support of partial unemployment and sick leave.

“We expect that other measures be taken and, given the state of public finances, there is room for a fiscal policy more expansionary” said Olle Holmgren.

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