Tackling the worst pandemic that humanity has faced in a century required some extreme measures, didn’t it? Lockdowns have been one of the most common, yet extreme measures taken in order to control the spread of the coronavirus. People, and especially the elderly and those with health problems, were required to stay at home so that they do not put themselves or the others into risk. Businesses closed, employees were laid off or were required to work from home. Everything just froze based on a political and medical decision. Economists raised the alarm regarding the impact of these restrictive measures on the global economy, but lockdowns were enforced anyway.
After severe quarantines in most countries around the world and the restrictive measures that followed, the signs of the economic catastrophe cannot be hidden or devalued. The reason is that under lockdown businesses do not sell due to limited consumption and demand by households in isolation. This led to shrinking output, trade, consumption and investments. As a result, global recession is projected at 4.9% in 2020 and almost 8% for advanced countries, while the economic recovery does not seem rapid enough. Unemployment has skyrocketed, while more and more people require government assistance. Even during the devastating 2008 financial crisis, the global GDP dropped by just 0,1%. The effects of shutting down the economy look dooming in the biggest part of the world.
And then there is the case of Sweden. Contrary to the way that most western countries handled the pandemic, Sweden reacted very differently. They never went on lockdown. They never closed businesses and schools. They allowed people to live and move freely as always by applying basic sanitary and social distancing rules as tools to control the spread. The Swedish accepted a potential higher level of cases and fatalities from COVID-19 towards what it is called herd immunity. In that way, they tried to avoid further economic collapse that would severely afflict weaker and poorer communities leading to more death and desperation. The Scandinavian country was vilified right from the start by global and domestic media all over the world as cruel or irresponsible. But did the Swedish go so wrong after all?
Sweden just recorded its worst GDP fall in modern history, even worse than the 3,8% decline during the global financial crisis in 2008. The Swedish GDP fell 8,6% in the second quarter of the year despite not going on lockdown, after a narrow growth (+0,1%) in the first quarter. However, Sweden is better than most European countries. The Eurozone’s economy shrunk by 12,1% on average when compared to the previous quarter, while the United States’ GDP dropped by a terrifying 32,9%. The biggest declines, among European countries, have been recorded in the Spanish GDP (-18,5%), the Portuguese (-14,1%) and the French (-13,8%). Meanwhile, the EU’s strongest economy, Germany, recorded a drop of 10,1% and other strong world’s economies like Canada, UK, or Brazil are also on a double-digit percentage drop in GDP.
Considering that Sweden marked a 0,1% growth in the first quarter of the year, the annualized recession is projected around just 5%, almost half than in similar projections for most European economies. Sweden substantially overperforms economies around the world during this pandemic due to their decision to not have a lockdown in order to stop the spread of the virus, which is now on the raise again. However, in Sweden that has no lockdowns and mask mandates the spread of the virus is not increasing.
Let’s face it, lockdowns did not have the expected results; at least from an economic viewpoint. That is why the very few people that were lockdowns’ stronger advocates in the beginning, now reject any further lockdown. They might have been considered medically necessary, but at what cost? If we take all the facts into account, analyzing both the medical and economic side, we can reach an interesting conclusion. The drawbacks of quarantine and the hard restrictions outreach the benefits. We need to do the best we can to keep people’s freedoms and the economy rolling, while protecting the most vulnerable of our citizens at the same time.