Statistics Denmark estimates that the country’s GDP fell by 7.4 percent in the second quarter of 2020 compared with the first quarter.
That would represent the largest fall in GDP since the early 1990s, when the national stats agency began to measure economic growth in Denmark on a quarterly basis.
— Danmarks Statistik (@DSTdk) August 14, 2020
The primary cause for the downturn is the impact of the societal lockdown introduced in response to the coronavirus epidemic.
“There is no doubt that today’s GDP figures for the second quarter will go down in the economic history books,” said Tore Stramer, senior economist with the Danish Chamber of Commerce (Dansk Erhverv).
“A fall in BNP of 7.4 percent over a single quarter is incredibly dramatic and never before seen in peacetime,” Stramer said.
“We have to go all the way back to the beginning of World War Two in 1940 to find a similar fall in economic activity in such a short time,” he added.
The figure means that Denmark has technically entered a recession for the first time since the Global Financial Crisis in 2009.
A ‘technical recession’ is defined as two consecutive quarters with negative changes in GDP. The Danish economy also shrank, by around 2 percent, in the first quarter of 2020.
Despite the huge dip, there are reasons to be optimistic, according to Stramer.
Some signs are present that the third quarter of the year is already beginning to see a turnaround, including increases in employment and consumer spending, he told Ritzau.
Those views were shared by Confederation of Danish Industry (Dansk Industri) senior economist Allan Sørensen.
“Following reopening, several key measures are fortunately beginning to correct themselves,” Sørensen said.
“We’ve seen Danes returning to businesses in turn with reopening,” he said.
But other areas – including export and corporate investment – are likely to take longer to recover from the coronavirus crisis, he added.
The GDP figures from Statistics Denmark are preliminary and will be reviewed as more information comes in.
Denmark’s economic dip is smaller than that in several other European countries, including neighbouring Sweden – although Sweden, which saw 0.1 percent growth in the first quarter of the year, is not in a technical recession.
These are the latest available flash estimates of GDP growth in the second quarter from Eurostat:
EU average: -11.9