Sweden’s gross domestic product (GDP) tumbled 8.6% in the second quarter of the year, according to a flash estimate from the country’s statistics office on Wednesday, recording its largest single quarterly drop in modern history.
The record decline, broadly in line with consensus, was significantly worse than even the fourth quarter of 2008 when the Nordic country recorded a fall of 3.8% during the global financial crisis.
However, Sweden’s economy still outperformed many of its European counterparts over the three-month period through to the end of June. It follows the government’s decision not to impose a full-scale lockdown to curb the spread of the coronavirus.
David Oxley, senior Europe economist at Capital Economics, told CNBC via email that Sweden’s sharp GDP contraction “confirms that it has not been immune to Covid, despite the government’s well-documented light-touch lockdown.”
“Nonetheless, the economic crunch over the first half of the year was in a different league entirely to the horror shows in southern Europe,” he added.
The euro zone’s economy contracted by 12.1% in the second quarter when compared to the previous quarter and by 11.9% across the broader European Union. The Spanish economy recorded the sharpest decline among member states when compared to the previous quarter, falling 18.5%.
It was followed by Portugal (-14.1%) and France (-13.8%), respectively, over the same period. Germany, often described as Europe’s growth engine, recorded a drop of 10.1% when compared to the first three months of the year.
Robert Bergqvist, chief economist at SEB bank, told CNBC via email that considering Sweden’s stronger first quarter, Swedish GDP in the first half of the year had declined “only by around half as much as GDP in the euro area.”
“Euro area growth seems to be rebounding more strongly in Q3, but we predict the Swedish economy to continue to outperform euroland also going forward,” he added.
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.
In direct contrast to many countries across Europe, Sweden has kept most schools, particularly for younger children, and many businesses open in the wake of the coronavirus pandemic.
The absence of a full-scale lockdown has coincided with the country recording more Covid-19 infections and related fatalities than all of its Nordic neighbors combined — Finland, Denmark, Norway and Iceland.
To date, Sweden has reported 81,181 cases of the coronavirus, with 5,747 deaths, according to data compiled by Johns Hopkins University.
Care home deaths had reportedly accounted for almost half of all fatalities linked to the coronavirus in Sweden in the first half of the year.
As of Wednesday, data published by Our World in Data showed Sweden has recorded 0.64 deaths per million per day on a rolling average over the last seven days. Earlier this year, the country briefly had the highest daily death rate per capita of any country across the globe, reporting 5.5 deaths per million per day as of May 29.
Brazil, which has recorded the world’s second-worst coronavirus outbreak, currently has the highest daily death rate per capita, reporting a rolling average of 4.74 deaths per million per day.