Nordic Corona situation and what is Nordic specific

Nordic Corona (Covid-19) status and what is Nordic specific

Dag A.D. Messelt, CEFA

The Corona virus is present in the Nordics as elsewhere. It is worth to notice that Norway stands out with a high number of persons being contaminated, but this is due to very large testing program of the population with over 8 000 per million.

There are fatalities in all countries; Sweden 239, Denmark 104, Norway 45 and Finland 17.

Nordic Social distancing measures

All Nordic countries have taken serious social distancing measures, but to a differing degree. These differences are largely explained by different levels of power of the virologists or contamination authorities versus the politicians.
The strictest are Denmark and Norway, thereafter Finland. Sweden is the less strict; this is also where the virologists or contamination authorities have the most power.
In the region, there is no confinement as the Nordic model builds on trust and social responsibility.

The Swedish case – a different approach:
• Borders are not closed to EEE citizens
• Up to 50 persons can meet
• Elementary school is open
• Shops are open
• Restaurants are open
• Hairdressers and other consumer services are open

All Nordic measures are in place until after Easter (13/4), and Denmark has been the most vocal recently considering lifting partly the social distancing to relaunch some economic activity.

Nordic Economic Impact

On a regional level, companies suffer terribly from liquidity crisis due to abrupt fall in revenues and they need to reduce fixed costs quickly. One of first the reactions is to lay off employees.
In Norway, that already has a system in place to lay off “short term” employees, while keeping their work contract, have seen a violent surge in unemployed to over 10%.
The other Nordic countries did not have this system, but this has now been installed, and unemployment is increasing. Governments are predicting a surge of unemployment in these countries as well.
We will see bankruptcies and increasing unemployment as everywhere.
The GDP will be severely hit as elsewhere, with an extra hit for Norway if the oil price stays long at the current very low levels.

Nordic Central bank and Government reactions

All the Nordic countries have come up with powerful action plans from both central banks and governments to
• help companies to stay afloat and to lay off as few employees as possible,
• help unemployed with financial support and
• help the financial market calm down, through buy programs of credit.

Outlook for the Nordic Corona situation?

It is hard to say of course, but hereunder are some Nordic specificities worth noticing.

On the Nordic social distancing and health side:
• Population density is very low (with the exception of Denmark) and the region is geographically isolated with water around
• Nordic populations are in average young; Norway 39.7, Sweden 40.5, Denmark 41.9 and Finland 42.9 versus EU 43.7
• The occurrence of antibiotic resistant bacteria in hospital environments is relatively low in the region

On the Nordic Economic side:
• As elsewhere the x-factor is how long the “lock down” will last, the longer the harder economic shock
• State finances are strong in the Nordics, this gives some leeway to support the economy in these difficult times
• Nordic banks are also well capitalised, very useful now

The big question now in the region is whether Sweden is showing the way when listening the most to the virologists or contamination authorities that consider regional specificities.

Time will show…

On the same subject:

Second interview with our Nordic Fixed Income managers – Corona (Covid19) crisis impacts

Nordic Fixed Income Update - Is the bond market crisis over? I have discussed with our Nordic portfolio managers. Q – What is on the top of your mind now after the liquidity crisis we have seen in the Fixed Income credit markets? We are asking ourselves many questions now:

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