virus on recession graph

Governments Respond as COVID-19 Cases Appear to Flatten

Swedes Take the Lead

As the world continues to grapple with the financial impact of the COVID-19 pandemic, governments are trying to decide what reopening their economies could look like. In Europe, the process has not been uniform . As the hardest hit countries report flattening death and infection rates, Germany permitted small stores and car dealerships to reopen on Monday. Spain, meanwhile, is considering extending the lockdown for another month.

Sweden took the controversial approach of allowing bars, restaurants, and schools to stay open throughout the peak of the pandemic. Instead of issuing full stay-at-home orders like in Spain and Italy, Sweden simply asked its residents to act responsibly. As of Sunday, the country has seen 1,540 COVID-19 related deaths which, though still tragic, is far lower than numbers in Italy and Spain. Swedish health authorities said this could be a sign that the country’s more relaxed measures are working. “While Sweden’s unwillingness to lock down the country could ultimately prove to be ill-judged, for now, if the infection curve flattens out soon, the economy could be better placed to rebound,” said HSBC Global Research Economist, James Pomeroy. Volvo (VOLV-A) restarted car production in Swedish plants on Monday.

Sweden’s approach might not work for every country, analysts say. It may be succeeding for now because Swedish households are fairly small, many people already work from home, and everyone is guaranteed fast internet. Those factors make remote work and social distancing much easier to implement. Another possibility: Swedes might not need hefty fines or legal restrictions to be motivated to stay home.

Meanwhile, in the United States

Protests erupted around the US last week and over the weekend, as some Americans expressed frustration that the economy is not reopening quickly enough. The United States has seen the highest death toll in the world from the coronavirus, with more than 40,000 total fatalities.

One challenge in the United States is that the shut down and reopening are decentralized processes, managed on a state-by-state basis. As states like Florida and Texas reopen, New York is keeping all but essential businesses closed.

What exactly qualifies as an essential business is also decentralized and anything but standard. In Ohio, a visit to Bath & Body Works (LB), may be called essential, while pet grooming is not. In Florida, World Wrestling Entertainment (WWE) has also been deemed essential.

The confusion about what’s allowed and what isn’t has led many to call for federal guidelines. In a letter to the Trump Administration, the National Retail Federation wrote, “There remains a need for clear national guidance to resolve questions caused by a number of conflicting state and local orders.”

Asia Struggles with Resurgence

Some countries in Asia are facing rising COVID-19 cases in previously missed pockets. In Japan, cases surged past the 10,000 mark, while Singapore uncovered 596 additional cases over the weekend, making Singapore the current leader in Asian COVID-19 infections. Some researchers suspect that the resurgence of infections is due to international travelers returning from abroad.

Around the world, people have been hanging their hopes on the possibility of a COVID-19 vaccine in the future. David Nabarro, an envoy for the World Health Organization warned, however, that a vaccine might not be coming. “Some viruses are very, very difficult when it comes to vaccine development, so for the foreseeable future, we are going to have to find ways to go about our lives with this virus as a constant threat.” He said if that prediction proves true, people around the world could be social distancing for a long time to come.

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