Gothenburg in Recession: Impact of the Pandemic Coronavirus


Gothenburg, the second largest city in Sweden and the heart of Scandinavia, is in recession due to the pandemic coronavirus disease or Covid-19. The pandemic has affected almost all the countries in the world bringing every aspect of economic activity to a standstill including transport. According to a report by Business Region Göteborg, the coronavirus has pushed the city in to recession. The report says, “The ongoing corona pandemic has brought the world’s economy to a standstill. The effects are clearly seen even locally. In the Gothenburg region, unemployment has increased as the number of redundancies rises, shows Business Region Göteborg’s second Economic Outlook report of 2020. The weak global growth has hit the region’s export-intensive business community hard, as demand for products has fallen. But the impacts reach far beyond export companies. The overall economic tendency indicator for the region’s business community for March and April was 60.9.”

Henrik Einarsson, director of business establishment and investment services at Business Region Göteborg, said in the report, “This indicates that the Gothenburg region has officially gone into a recession. At the same time, we should remember that all countries and regions have been hard hit by the pandemic and that Sweden hasn’t been in a total lock-down, which may give us a better starting point compared with other countries. But in any case, we are heading into tougher times and this will show in the labour market in the future.”

At this time of the year, Gothenburg buzzes with people on the streets and with the summer activities as it is also a popular destination for tourists in Europe. Many establishments are shut including Liseberg the most popular amusement park in Scandinavia.

The report noted the unemployment is also on the rise. “The unemployment rate continues to rise and in May was 7.5 per cent (+2.2%-points) in the Gothenburg region and 8.4 per cent (+1.8%-points) for Sweden as a whole. In the Stockholm and Malmö regions, unemployment was 7.8 per cent (+2.1%-points) and 11.1 per cent (+1.6%-points) respectively.”

Peter Warda, analyst at Business Region Göteborg, observed, “The development we are seeing is the combined effects of the previous slowdown and the corona pandemic, which has eased the demand for labour significantly. Our assessment is that unemployment in the Gothenburg region will continue to rise until at least the end of the year.”

Already 9,200 people were affected in the region, and the number of people who are on the short-time work allowance programme has increased. By the end of May 2020, over 125,000 people have taken part in the programme and had their hours reduced. The short-time work allowance programme has lessened the unemployment and the increase of redundancies. The short-time work allowance programme introduced by the Swedish government allows the employers to reduce employees’ working hours by up to 80 per cent and receive financial support from the government. It will remain in effect till the end of this year.

For more information, you can read: Business Region Göteborg