Einar H. Dyvik
Research expert covering Nordics and global data for society, economy, and politics
Get in touch with us nowEconomic downturn and government financial support
The restrictions had severe consequences for the economies of the Nordic countries. The gross domestic product (GDP) in all the Nordic countries fell in 2020, but had a positive growth rate in 2021 and 2022. Furthermore, the unemployment rates increased in all five countries in 2020 and stayed at this level throughout 2021. Due to financial support packages from the Nordic governments, the worst economic consequences were avoided, but the pandemic still caused a high number of layoffs, bankruptcies, and financial insecurities for both individuals and companies.Tourism among the losers, e-commerce among the winners
With strict travel and contact restrictions in place, tourism was hit hard by the COVID-19 pandemic. Hotel bookings decreased sharply in the Nordic countries after the outbreak, as did the revenue per available room. In Iceland, for instance, where tourism is an important industry, the number of employees in the sector dropped throughout 2020, but started to recover again in 2021 and the beginning of 2022.On the other hand, e-commerce sales boomed through the pandemic, as people increasingly ordered everything from apparel to food online. Beauty and healthcare products dominated the online market in Sweden. In Denmark, nearly 30 percent of survey respondents bought online several times a month. However, in July 2020, three fourths of respondents in Norway reported that they bought about the same amount online as they did before the pandemic, but there was a more significant increase among heavy shoppers.
Long-term effects
Since the fall of 2021, inflation increased throughout the world. The reasons behind the increasing prices are complex, but is partly down to COVID-19. For instance, supply chains were disrupted by lockdowns and quarantine requirements, which has led to increasing transportation costs. Moreover, as the economy began to recover and people's private economy became healthier, demands increased, causing prices to go up. The invasion of the Ukraine by Russia has put a toll on gas and oil trade which has caused energy prices to spike and further push inflation rates. As a result, the inflation rate in the Nordic countries increased heavily in 2022. Moreover, after an economic downturn in 2020, private consumption grew in all five Nordic countries in 2021, signalling a fast economic recovery. In Iceland, the annual turnover of travel agencies increased by 74 percent in 2021. Hence, it seems that the economies of the Nordic countries have been slowly recovering after the shock of 2020.
