Why are Swedish companies performing better than expected?

Unlike any other European country, Sweden’s approach to COVID-19 has been highly controversial; but how beneficial has its policy actually been to its’ people and the economy thus far?

First, we must understand why their approach has been questionable. Sweden thus far has dealt with the pandemic by using a unique strategy: relying on herd immunity. This overall has been considered by the media to be a ‘light-touch’ or ‘soft’ approach to COVID-19 due to the few restrictions policies, and no official lockdowns enforced by Swedish authorities. This meant schools were open for all ages up to the age of 16 and businesses and transport remained open for all. While Swedish authorities advised citizens to act cautiously, this was not regulated or compulsory. Only higher education institutions and the elderly were told by the government to stay home.

The no-lockdown strategy designed by Sweden’s state epidemiologist, Anders Tegnell, had the view to create pre-emptive tactics as the Swedish government wanted to prepare for the possibility of a second wave of infection, in case a vaccine is not made available at that time. Although, Swedish authorities have not explicitly stated that the goal of this strategy is to create ‘herd immunity’, many critics believe this to be the case. The criticisms of Sweden’s approach arises in regard to the effectiveness of herd immunity without a vaccine. To further explore this, we will first identify what herd immunity is.

Herd immunity usually involves vaccinating a large percentage of the population to achieve resistance to the spread of a contagious disease or virus. However, it is possible to create herd immunity naturally, by getting people exposed to a virus or disease and trusting that they become resistant through antibody formation. Unfortunately, for Sweden, this is a significant risk to take and is reflected in the country’s death toll, which is considerably higher than its neighbouring countries such as Denmark and Norway, which did impose restrictions – shutting borders, schools, and more. That being said, Sweden’s death toll is considerably lower than that of Spain, Italy, and the United Kingdom. Which poses the question, is their strategy cynical if the death toll is lower than countries with stricter restrictions such as the UK? Moreover, what are the positive effects of a no-lockdown strategy on the Swedish economy?

Without imposing an official lockdown, Swedish businesses are already familiar and comfortable working through the pandemic if a second wave were to occur, and consumers generally feel safer to spend and go out – This explains the growth market Sweden is experiencing at the moment. Over the past few weeks, Sweden’s businesses surpassed market expectations in almost every sector, from lock maker Assa Abloy to telecoms equipment maker Ericsson. Nonetheless, it is essential to understand that market expectations for Sweden were lower, recognising their approach to COVID-19. So, although there has been growth, in some cases this means a smaller decline than what analysts had envisaged. Companies such as Volvo saw drops in sales at the beginning of the pandemic but quickly adapted to create profit despite disruption to the supply chain as the made deep cost cuts.

Thus, the strategy has shown that it can be useful in maintaining the economy as companies have already adapted to become more flexible. Nevertheless, this can be said for many countries. Though, the psychological effects that Sweden’s strategy may have on consumer spending and business functionality may help them continue to profit even if a second wave hits.

In regards to the death toll and the economy, Sweden is performing better than the United Kingdom, Spain, and Italy, both financially and within public health, despite having no lockdown. However, many researchers believe Sweden’s mortality rate has been lower than expected because a significant portion of the population has willingly volunteered to self-isolate. This indicates that a similar strategy may be less likely to work in countries like the United States where there is a more individualised mentality.

Furthermore, the success of Sweden’s strategy is not likely to be seen until this pandemic is over. Many economists predict that Sweden will not outperform its neighbouring Scandinavian countries, but will continue to see growth in the market. But how long will this growth last? More importantly, will the inquiry report into Sweden’s strategy prove it to be effective in terms of herd immunity? Or will Sweden have failed their citizens?

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