Just like every other part of the world, the Scandinavian countries are equally affected by COVID -19. Be it Sweden, Denmark, or Norway, the political, economic, and health impact is significant. Denmark, due to its quick and strict policies, has managed to control the pandemic. However, the stringent measures come at the cost of a sluggish economy. So, what will be the impact of coronavirus in Scandinavia?
Similarly, the resource-rich Norwegians are having a tough time as well. On the other hand, Sweden has not been able to control the pandemic, with more than 2000 active cases, even its neighbors have closed their borders to the country. In this article, I will discuss some effects of this life-threatening virus in Scandinavia:
Oil and Gas
Unlike other Scandinavian nations, Norway is different. Being the biggest oil producer of Western Europe, it acquires a unique position. With the rise of the contagion, the economy of the country has stumbled. Economic experts say that unemployment has quadrupled since the pandemic. Since Norway is an oil and gas generator, it is likely to be affected the most by the pandemic. The disruptions in demand and price will leave both short and long-term impacts on the country’s economy.
The Wealth Fund
The Wealth Fund is one distinct thing that differentiates Norway from the two Scandinavian countries. It is a saving account of the country for a rainy day. Before the pandemic, the government used to take out 3% of the funds for its budget. However, the corona shock will force the authorities to take out more funds as the entire economy is facing a tough time.
As per economic experts, Norway, which had a strong economy, because of oil and tourism, is likely to be in the same cue with other countries. The only thing that gives hope to the Norwegian government is its savings. Once the pandemic is over, the economy will need to be restarted.
A Relaxed Lockdown
Sweden showed a controversial approach to the virus. Sweden is one of them. The country dealt with the pandemic with light hands. People were often seen hanging out in cafes and bars when a strict lockdown was imposed in other parts of the world. Similarly, restaurants, amusement parks, and schools were seen open with some guidelines of social distancing.
Impact of Sweden’s Plan
The plan of the Swedish government, which was made to secure healthcare without putting much pressure on the economy, has blown away to pieces. With thousands of infected people, the Swedish government was ineffective in controlling the spiraling virus.
In comparison to its neighbors, Norway, and Denmark, the mortality rate in Sweden was higher. Thus, experts have predicted that the country will come into acute economic pressure and a high unemployment rate.
Unemployment and GDP
The rate of joblessness, which was 6 % in 2019, has now jumped to 9%, exports are likely to get affected, and GDP will face a serious downfall. Sweden, which is largely dependent on the exports, will have to halt several businesses. The truck makers Scania and Volvo cars are the best examples of it. These two big companies in Sweden are unable to run their operations due to insufficient supply chain.
Low Debt Rate
Coronavirus has proved to be highly expensive for Denmark. From cutoffs in monthly compensation to decreased revenues, the virus will leave a long-lasting impact on the country. One thing that makes Denmark stands apart from other nations is its budget surplus and the lowest rate of debt. However, if the pandemic continues, the country will have to face problems.
A Stable Economy
Denmark was enjoying a strong economy before the outbreak. However, this major hit has left severe cracks in its plans. With no clue about when the virus will get over, the government is sitting in a perplexing situation. However, the position of Denmark is far better than many others. The government is satisfied that the country has enough savings to smooth them over until the world economy restarts.
GDP and Exports
As far as the GDP is concerned, it will shrink by 5 % this year in comparison to neighboring Sweden, which will face the shrink by 9%. Experts think that the economic hit will not be highly tough for Denmark as its main exports are based on pigs and drugs. Sweden will have a much larger impact as its exports are on the luxurious side like cars, trucks, and other vehicles. At present, the unemployment rate in Denmark is not that bad. It’s just 4%, but since the government employees are facing great cutoffs, it may increase further.
What Will Be the Impact of Coronavirus in Scandinavia? Final Thoughts
Economic experts are of the view that Scandinavia’s strength is based on exports. Thus, it makes itself dependent on other countries like Germany, U.S, Italy, etc. If the global economy does not recover soon, Scandinavia will suffer as well.
A lack of exports from Scandinavian countries is affecting businesses in other countries as well; Carpet Cleaning Tunbridge Wells in the UK reported that their supply of cleaning products was disrupted as a result of an overall disruption in the supply chain from Scandinavian countries. The same is the case with restaurants, bars, amusement centers, car dealerships, and many more.
Some experts suggest that if the world faces another pandemic, the containment approach adopted by Denmark will be ideal. Their policy of restricting few places instead of imposing a country-wide lockdown seems to have worked best.
At this stage, it will be unreasonable to judge the overall impact of the virus on Scandinavia. It is because the virus is still alive, and some countries are experiencing the second and third rounds. However, it can be said that the unemployment rate has doubled and can decrease further if the situation gets worse. Besides this, exports are facing a significant hit, luxurious goods are experiencing a decrease in demand, and GDP is showing a downward trend.
Authorities need to rise, use the surplus budget, and develop strategic plans to combat the sluggish economy. After controlling the short-term impacts of the virus, steps need to be taken to deal with the long-term impacts. Fiscal policies need to be revised, and a coherent plan is the need of an hour.
Feature image (on top): Shutterstock
What Will Be the Impact of Coronavirus in Scandinavia? written exclusively for for Daily Scandinavian by Myrah Abrar. Myrah is a computer science graduate with a passion for web development and digital marketing. She writes blog articles for Carpet Cleaning Tunbridge Wells.