The accident happened on the stretch of the course between Vitaby and Äljaröd, north of Tomelilla.
Jonas Kruse, an expert commentator for Swedish Television, was standing close to the scene and saw the accident.
“I was standing at the side of the road, ten metres after a ridge which all the cars more or less flew over,” he told TT.
“Then I saw one of the cars come over rather too fast – not a big mistake but a bit too fast.”
The car landed hard on one wheel, hit a rock and then the tree which “rolled”, said Kruse. He believed the spectator was not hit by the car but by the falling tree.
According to the competition organisers, two of the crowd were taken by ambulance to hospitals in Lund and Kristianstad with head injuries. Two others were taken to Kristianstad with less serious injuries.
Later in the evening the person who had been taken to Lund died from internal bleeding, according to hospital sources.
Jonas Kruse pointed out that safety on Swedish rally circuits is among the best in the world and that rescue services were quickly at the scene.
“It was an accident. You can’t watch the whole stretch, tens of kilometres, and it’s hard to tell whether the public were standing in the wrong place,” he said.
The motor sport association has launched an investigation into how the accident happened, but the competitions press spokesman, Johan Carlstedt, said that he did not think people would be put off coming to watch the sport.
“No, I don’t think so – but you have to have respect for it,” he told Dagens Nyheter.
“Right after it happens it’s naturally terrible. But if you deal with it in the right way you can learn something from it – and it’s important that the sport survives,” added Carlstedt.
The scene of the crash was on a stretch popular with photographers and the car was going at about 80 kilometres an hour.
The driver and co-driver were said to be shocked but suffered no physical injuries.