There are lots of different ways of measuring the terrible state of the global economy. The collapse in overall output. The fall in trade as ports and airports empty. The trillions printed by central banks, and the soaring price of gold as investors lose faith in a recovery. But one is surely this: keeping the drop in GDP in single digits actually looks pretty good.
Sweden this morning reported its flash estimate of second quarter GDP. Output was down by 8.6 per cent compared with the first quarter, and 8.2 per cent compared with the same quarter last year. It was, as the release helpfully pointed out, the worst result it had recorded since it started this series of statistics in 1980.
Without the Scandinavian reserve, however, it could have put a different spin on the figures. It was also better than most other places. Overall, the euro-zone reported a 12 per cent drop in output over the same period. Spain was down by a terrifying 18.5 per cent, France by 13 per cent, and Germany by ten per cent. The United States was down by 9.5 per cent, and whilst we are still waiting for a figure from this country it is looking as if we may be down by 15 per cent, towards the bottom end of the scale. Sweden has come through the worst three months of the last century of economic history in better shape than any of it major rivals.
The Swedish economy has always been robust of course. A highly skilled workforce, plenty of big successful companies, a thriving tech sector, and deregulated local markets, have meant that despite its generous welfare systems and relatively high taxes it has always been among the world’s more prosperous nations. But there is, of course, a little more to it than that. Alone among the world’s developed economies, Sweden didn’t go into full lockdown. There was plenty of social distancing, lots of lectures on washing your hands, and some restrictions on movement, but schools remained open and so did most businesses. It had the lightest touch of the major economies.
True, infections were high to start with, and so was the mortality rate from Covid-19, at least compared to its immediate neighbours. Right now, however, it doesn’t look as if the final tally will be much different to anywhere else. But the economy will emerge in far better condition, with less lost output, and less extra debt as well.
There is a lesson in that for other countries. Of course it is important to protect health systems and make sure they are not overwhelmed. But it is also important to protect the economy. If you don’t, very quickly there aren’t any jobs to go back to, and there won’t be any money to pay for healthcare or for anything else for that matter. Sweden has done a better job of protecting output than any other major, developed country. And if a second wave does arrive in the autumn or winter, the rest of the world should take note – and not rush straight back into lockdown no matter what the pressure to do so might be.