Sweden’s economy actually grew in the first quarter after it opted against a full virus lockdown

The Swedish economy expanded at a far superior rate than many of its European counterparts over the first three months of the year, data published Friday showed, following the government’s decision not to impose a full lockdown to contain the spread of the coronavirus. The Nordic country’s statistics office reported gross domestic product (GDP), the broadest measure of economic health, grew at an annual rate of 0.4% in the first quarter.

Sweden’s GDP increased by 0.1% in the first quarter, when seasonally adjusted and compared to the final three months of 2019. The median forecasters in a Reuters poll of economists had expected to see a 0.6% contraction on a quarterly basis. Confinement measures were brought in toward the end of the first quarter. As a result, economists expect countries to report an even sharper contraction over the next three months of the year.

It comes at a time when Sweden has the highest coronavirus death rate in the world. The Swedish government has recommended its citizens should stay and work from home, if possible. It has also brought in social-distancing measures, but people remain free to visit bars and restaurants, and students under 16-years-old continue to go to school.

The contrarian strategy is designed to allow some exposure to the virus to try to build immunity among the general population while protecting high-risk groups such as the elderly. Sweden’s chief epidemiologist told CNBC last month that the capital Stockholm could be heading for so-called “herd immunity” within weeks, although there are doubts whether this has been achieved. To date, Sweden has reported 35,727 cases of the coronavirus, with 4,266 deaths, according to data compiled by Johns Hopkins University. To be sure, Sweden has recorded more Covid-19 infections and fatalities than all its Nordic neighbors combined — Finland, Denmark, Norway and Iceland.

The National Institute of Economic Research, a respected think tank, said in a statement published April 29 that it believed Sweden’s economy would shrink 7% this year, with unemployment anticipated to rise to 10.2%. “While Sweden’s economy has fared better than the worst-affected countries, as a result of its comparatively light-touch lockdown, it is still set for a year to forget,” David Oxley, senior Europe economist at Capital Economics, said in a research note published Thursday. “We expect the decline in GDP this year as a whole to be in a similar ballpark to that in Germany,” he added.

Sweden’s economy actually grew in the first quarter after it opted against a full virus lockdown, CNBC, May 29