STOCKHOLM (Reuters) – Sweden’s economy has recovered more quickly from the coronavirus pandemic than expected, though the second wave of infections that has hit the country in recent weeks will slow the rebound next year, the government said on Wednesday.
Gross domestic product is likely to shrink 2.9% this year, its revised forecasts showed, a much better outcome than the 7% contraction the government expected in May at the height of the first wave of the pandemic.
The figure is also much more positive than the 7.3% drop in euro zone GDP seen by the European Central Bank.
“The recovery in the Swedish economy has been stronger in the autumn than we and many other forecasters had expected,” Finance Minister Magdalena Andersson told a news briefing.
“At the same time, both the increased infection rates and the measures taken to restrict that… are expected to dampen activity in the current quarter and at the start of next year.”
The government cut its forecast for growth in 2021 to 3.0% against its previous expectation of a rebound of 4.1%.
Sweden opted against the kind of strict lockdown adopted by most European countries in the spring and has continued to rely more on voluntary social distancing measures during the second wave, despite the surge in new infections.
Andersson said the lighter-touch measures had helped cushion the economic impact, but said that had not been the reason behind Sweden’s approach.
“It has never been the case that the government has sat and balanced people’s lives and health against development of the economy,” she said.
Sweden’s death rate per capita is several times higher than that of its Nordic neighbours, but lower than in several European countries that opted for lockdowns.
More than 7,650 people have died in Sweden as a result of the pandemic against fewer than 400 in Norway, whose population is roughly half of Sweden’s 10 million people.
Norway’s economy is expected to shrink in line with Sweden’s this year.
(Reporting by Simon Johnson; editing by Niklas Pollard and Gareth Jones)