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ECONOMY

Danish economy figures revised: Corona damage less severe than feared

Denmark’s economy shrank by 6.8 percent in the second quarter of 2020 in comparison with the first quarter, according to revised figures from Statistics Denmark.

Danish economy figures revised: Corona damage less severe than feared
Photo: Kristian Djurhuus/Ritzau Scanpix

The economic downturn, although still historically large, is therefore less than previous estimates had projected.

In August, a preliminary calculation of the second-quarter GDP has it as falling by 7.4 percent on Q1. This was later revised to 6.9 percent and has now been reduced further.

GDP is one of the main indicators of the health of the national economy. The numbers are regularly revised as more data becomes available as to economic development.

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Finance minister Nicolai Wammen said that the Danish economy has nevertheless been hard hit by the coronavirus.

“Not least, we can see that export compared to last year has been reduced by almost one fifth,” he said.

Some positive signs, including new unemployment figures which show a five percent reduction in unemployment in August, allowed Wammen to also sound some optimistic notes.

“Although we are heading the right way, there is still a lot of uncertainty. Corona is still amongst us and affecting both Danish and international economy,” he said.

 

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ECONOMY

Denmark’s central bank cuts interest rates in response to strong currency 

The central bank, Nationalbanken, has slightly lowered interest rates in response to the krone’s currently strong position against the euro.

Danish 50 krone notes in production. Denmark has adjusted its interest rates to maintain a consistent value of the krone against the euro.
Denmark has adjusted its interest rates to maintain a consistent value of the krone against the euro. Photo: Ólafur Steinar Gestsson/Ritzau Scanpix

Interest rates for current accounts, savings and loans are decreased by 0.1 percent, to 0.6 percent, 0.6 percent and 0.45 percent respectively.

“The interest rate decrease occurs based on Nationalbanken’s purchase of currency on the market,” the central bank said in a statement.

Nationalbanken is required to maintain a consistent exchange rate between the krone and the euro.

As such the bank is adjusting interest rates with momentum behind the Danish economy, job vacancies at a high level, house prices soaring and inflation conceivable.

“The National Bank has one mandate and one only. And that is to ensure the policy of foxed exchange with the euro. And we have seen in recent times that the krone has been a bit on the strong side and that the National Bank has sold Danish kroner,” Danske Bank senior analyst Olai Milhøj told news wire Ritzau.

“So now the dynamic will be changed a bit be reducing interest to make it a bit less attractive to hold Danish kroner,” he added.

The interest rate change is however discrete enough that it will likely only impact large scale speculators.

The change in the price of a euro is less than one øre (a hundredth of a krone) and is unlikely to impact interest rates offered by banks.

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