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ECONOMY

Denmark’s economy suffers ‘historic’ GDP drop in second quarter

The Danish economy shrunk by a historic amount in the second quarter of 2020.

Denmark’s economy suffers 'historic' GDP drop in second quarter
Photo: Henning Bagger/Ritzau Scanpix

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.

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
Belgium: -12.2
Czechia: -8.4
Germany: -10.1
Spain: -18.5
France: -13.8
Italy: -12.4
Latvia: -7.5
Lithuania: -5.1
Austria: -10.7
Portugal: -14.1
Sweden: -8.6

READ ALSO: Danish unemployment at lowest level since March

 

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SAS

‘We agree to disagree’: Still no progress in marathon SAS strike talks

By lunchtime on Friday, talks between the Scandinavian airline SAS and unions representing striking pilots were still stuck on "difficult issues".

'We agree to disagree': Still no progress in marathon SAS strike talks

“We agree that we disagree,” Roger Klokset, from the Norwegian pilots’ union, said at lunchtime outside the headquarters of the Confederation of Swedish Enterprise in Stockholm, where talks are taking place. “We are still working to find a solution, and so long as there is still some point in continuing negotiations, we will do that.” 

Mats Ruland, a mediator for the Norwegian government, said that there were “still several difficult issues which need to be solved”. 

At 1pm on Friday, the two sides took a short break from the talks for lunch, after starting at 9am. On Thursday, they negotiated for 15 hours, breaking off at 1am on Friday morning. 

READ ALSO: What’s the latest on the SAS plane strike?

Marianne Hernæs, SAS’s negotiator on Friday told journalists she was tired after sitting at the negotiating table long into the night. 

“We need to find a model where we can meet in the middle and which can ensure that we pull in the income that we are dependent on,” she said. 

Klokset said that there was “a good atmosphere” in the talks, and that the unions were sticking together to represent their members.

“I think we’ve been extremely flexible so far. It’s ‘out of this world’,’ said Henrik Thyregod, with the Danish pilots’ union. 

“This could have been solved back in December if SAS had not made unreasonable demands on the pilots,” Klokset added. 

The strike, which is now in its 12th day, has cost SAS up to 130m kronor a day, with 2,550 flights cancelled by Thursday, affecting 270,000 passengers. 

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