Swedish GDP drops 8.6% despite no lockdowns

Sweden’s economy shrank 8.6 percent in the second quarter, the nation’s statistics service said Wednesday, even though the country never imposed strict coronavirus lockdowns seen elsewhere in Europe.

The fall in gross domestic product (GDP) when compared to the second quarter of 2019 came in at 8.2 percent.

According to Statistics Sweden, the downturn represented the largest drop since at least 1980, which is as far back as comparable statistics are available.

Sweden’s government is expecting a six percent fall in GDP for the year as a whole — the largest since 1940.

The GDP figures presented are preliminary, with an update expected on August 28, and though the drop was significant, analysts had been expecting something in the ballpark.

“The sharp contraction in the Swedish economy… confirms that it has not been immune to COVID, despite the government’s well-documented light-touch lockdown,” David Oxley, senior economist at Capital Economics, said in a note. 

“Nonetheless, the economic crunch over the first half of the year is in a different league entirely to the horror shows elsewhere in Europe,” Oxley added. 

The eurozone’s GDP tumbled 12.1 percent in the second quarter, dragged down by even steeper falls in Spain, Italy and France where lockdowns hit the tourism sectors particularly hard.