In the crisis triggered by the coronavirus pandemic there are a number of factors indicating that the Swedish economy could be less negatively affected in the short term compared to other countries:

• The Swedish economy has not been closed down to the same extent that others have.
• The sectors that have been hardest hit by social distancing comprise a relatively small percentage of GDP in Sweden.
• The low national debt in Sweden provides relatively good opportunities to use fiscal policy stimulus to support companies and households that have been hit hard.

But there are also indications that the reverse could apply.

• The Swedish economy is dependent on trade with other countries, at the same time as the ongoing crisis exposes international trade to severe strain.
• Swedish households have a high level of debt, which entails risks for both households and the financial sector.

It is too early to say anything about how different economies will develop in the longer run. We are still at an early stage of the economic crisis, and much is still unclear with regard to the spread of the virus. It is therefore extremely difficult to know what the conditions will be for developments in the coming years.

Read the full report in Swedish  or English.

Paola Di Casola*

Sveriges Riksbank

Posted by Maria Perrotta Berlin

*The opinions expressed in this post are the sole responsibility of the author and should not be interpreted as reflecting the views of Sveriges Riksbank.