Why Sweden has become world’s cautionary tale
Its initial decision to allow life to carry on in the face of pandemic has yielded a surge of deaths besides dealing a body blow to its economy
Ever since the coronavirus emerged in Europe, Sweden has captured international attention by conducting an unorthodox, open-air experiment. It has allowed the world to examine what happens in a pandemic when a government allows life to carry on largely unhindered.
This is what has happened: Not only have thousands more people died than in neighbouring countries that imposed lockdowns, but Sweden’s economy has fared little better.
“They literally gained nothing,” said Jacob F. Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington. “It’s a self-inflicted wound, and they have no economic gains.”
Balancing lives with livelihoods
The results of Sweden’s experience are relevant well beyond Scandinavian shores. In the United States, many states have — at President Donald Trump’s urging — avoided lockdowns or lifted them prematurely on the assumption that this would foster economic revival, allowing people to return to workplaces, shops and restaurants.
In Britain, Prime Minister Boris Johnson reopened pubs and restaurants last weekend in a bid to restore normal economic life.
Implicit in these approaches is the assumption that governments must balance saving lives against the imperative to spare jobs, with the extra health risks of rolling back social distancing potentially justified by a resulting boost to prosperity. But Sweden’s grim result — more death and nearly equal economic damage — suggests that the supposed choice between lives and paychecks is a false one: A failure to impose social distancing can cost lives and jobs at the same time.
Approach less adopted
Sweden put stock in the sensibility of its people as it largely avoided imposing government prohibitions. The government allowed restaurants, gyms, shops, playgrounds and most schools to remain open. By contrast, Denmark and Norway opted for strict quarantines, banning large groups and locking down shops and restaurants.
More than three months later, the coronavirus is blamed for 5,440 deaths in Sweden, according
to the World Health Organisation. That might not sound especially horrendous compared with the more than 129,000 Americans who have died. But Sweden is a country of only 10.2 million people. Per million people, Sweden has suffered 40 per cent more deaths than the United States, 12 times more than
Norway, seven times more than Finland and six times more than Denmark.
Economic disaster
The elevated death toll resulting from Sweden’s approach has been clear for many weeks. What is only now emerging is how Sweden, despite letting its economy run unimpeded, has still suffered business-destroying, prosperity-diminishing damage and at nearly the same magnitude of its neighbours.
Sweden’s central bank expects its economy to contract by 4.5 per cent this year, a revision from a previously expected gain of 1.3 per cent. The unemployment rate jumped to 9 per cent in May from 7.1 per cent in March.
This is more or less how damage caused by the pandemic has played out in Denmark, where the central bank expects that the economy will shrink 4.1 per cent this year.
In short, Sweden suffered a vastly higher death rate while failing to collect on the expected economic gains.
Virus is the enemy
Here is one takeaway with potentially universal import: It is simplistic to portray government actions such as quarantines as the cause of economic damage. The real culprit is the virus itself. From Asia to Europe to the Americas, the risks of the pandemic have disrupted businesses while prompting people to avoid shopping malls and restaurants, regardless of official policy.
Sweden is exposed to the vagaries of global trade. Once the pandemic was unleashed, it was certain to suffer the economic consequences, said Kirkegaard, the economist.
“The Swedish manufacturing sector shut down when everyone else shut down because of the supply chain situation,” he said. “This was entirely predictable.”
Government inaction
What remained in the government’s sphere of influence was how many people would die. “There is just no questioning and no willingness from the Swedish government to really change tack, until it’s too late,” Kirkegaard said. “Which is astonishing, given that it’s been clear for quite some time that the economic gains that they claim to have gotten from this are just non-existent.”
Sweden’s laissez faire approach does appear to have minimised the economic damage compared with its neighbours in the first three months of the year, according to an assessment by the International Monetary Fund. But that effect has worn off as the force of the pandemic swept through the global economy, and as Swedish consumers have voluntarily curbed their shopping anyway.
Strikingly, older people those over 70 — reduced their spending more in Sweden than in Denmark, perhaps concerned that the business-asusual circumstances made going out especially risky.
There is just no questioning and no willingness at all from the Swedish government to really change tack, until it’s too late.”
Jacob F. Kirkegaard | Economist