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Monday, July 13, 2020

Why Sweden’s relaxed stance toward coronavirus will be difficult to replicate elsewhere, Goldman Sachs analysts say

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Sweden has employed one of the loosest restrictions to the coronavirus.

Unlike its European neighbors, there was no lockdown, bars and restaurants are open, as are hairdressers and gyms.

Sweden’s economic activity appears to be stronger than neighboring countries.

The results haven’t been terrible, though Sweden does have high-profile critics, including U.S. President Donald Trump, who tweeted that the fatalities were lower in neighboring Scandinavian countries.

While Trump is right, Sweden’s number of deaths per million residents is lower than other European countries including Spain, Italy and the U.K.

(At 243, according to Deutsche Bank-compiled figures, Sweden’s deaths per million residents is higher than the U.S. at 211.)

The early economic numbers seem to be, on the surface, favorable. Activity as measured by Google’s
GOOG,
+2.71%

tracker of mobile phone usage hasn’t dropped in Sweden as much as it has in other countries.

Still, analysts at Goldman Sachs say Sweden benefits from favorable demographics. Its population density is about half that of Italy, and Sweden has a high proportion of single-occupancy households, the analysts point out.

When the Goldman analysts combine proportion of single-occupancy households, the share of population aged at least 65 years old, hospital beds per million and confirmed cases per million, Sweden is more or less where one would forecast.

“We conclude that Sweden is not particularly suited as a reference point for the coronavirus response of other countries, as our analysis suggests that lower infection rate is likely to reflect in part less testing, while demographic and health-care factors may help explain the fatality rate. In our view, the Swedish experience therefore cannot be extrapolated to support a swift reopening elsewhere. That said, our analysis suggests that Germany could be in a better position to lift containment measures than southern Europe,” they say.

Sweden’s OMX 30
OMXS30,
+2.19%

over the last three months has dropped 16%, which isn’t as stark as the 20% decline for the German DAX
DAX,
+2.17%

and is about in line with the 15% fall in the S&P 500
SPX,
+1.74%
.

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