No, it’s not a sporting fixture, but one of the most important pieces of Covid-19 economic data for the UK economy and the economies of all countries of the world. On Wednesday Sweden will announce its first estimate of its gross domestic product for the period April to June when the virus took hold and was at its height across Europe.
And that’s because Sweden took a completely different approach to the pandemic and rejected a national lockdown when the virus arrived in their country. Schools and most offices, shops, and factories stayed open. As did bars and restaurants and most leisure, arts and cultural facilities. The Swedes described this as a “common-sense” approach.
So what are the economic results looking like for different businesses?
Two of Sweden’s biggest banks, Swedbank and Handelsbank, have reported higher than expected profits and stable growth in household lending and deposits as well as corporate deposits.
The mobile firm Ericsson reported an increase in profits for the period. The home appliances group Electrolux broke even rather than making an expected loss. All four of the industrial giants, Alfa Laval, Volvo, SKF and Trelleborg, have posted better than forecast results.
So currently Sweden’s economy does appear to be performing better than its European neighbours and experiencing economic benefits of not following Europe in implementing a national lockdown.
And the expectation for Wednesday is that Sweden’s economy will have shrunk less in the April to June period than the rest of Europe, possibly by as little as 4% against Germany’s expected 10% and America’s actual 9.5% posted last Thursday.
Then looking forward to the next few quarters Sweden’s economy seems better placed than the rest of Europe. And that’s because only 20% of Swedish workers as compared with more than 50% in Italy, Greece and Spain had their working hours cut during this first quarter that the pandemic hit and took hold.
And this means two things. First, that consumer spending will not be significantly reduced in the last six months of 2020. Second, that Sweden’s government has been able to avoid a costly furlough scheme and the other expensive support measures so that borrowing will be significantly less which means that the risk of future tax rises will be reduced.
Of course, the cost of Sweden’s “common-sense approach” has been one of the highest per capita death rates from Covid-19 in the world. And only time will tell whether or not Sweden’s approach was common-sense or madness. That’s why Wednesday’s results will be viewed with so much scrutiny.