Danish central bank expects coronavirus lockdown to slow economy

Denmark’s central bank Nationalbanken has predicted lower economic growth in 2021 than previously expected.

Danish central bank expects coronavirus lockdown to slow economy
Director of the Danish national bank Jens Rohde speaks to media on Wednesday. Photo: Emil Helms/Ritzau Scanpix

The country’s GDP is now expected to increase by 1.4 percent this year, according to the new prognosis published by the central bank on Wednesday. The earlier projection was 2.9 percent.

Low economic activity during the winter lockdown, which was partially lifted on March 1st when some shops reopened, has contributed to the slowdown.

Progression of Denmark’s vaccination programme and continued easing of restrictions is expected to enable economic activity and growth to recover later this year.

“There is still great uncertainty about the economic development, which could be a lot stronger or a lot weaker than in our prognoses,” Nationalbanken director Lars Rohde said.

“There may therefore be a need to restrict or ease planned fiscal policy when restrictions are lifted. And it is important to be prepared for both,” Rohde continued in a press statement.

The prognosis suggests Denmark’s economy will make a limited recovery from the disastrous effects of 2020 and the coronavirus crisis. Initial indicators published by Statistics Denmark in February suggested that the economy shrank by 3.7 percent last year. That is the biggest hit to the economy since the global financial crisis in 2009.

The previous prognosis from the national bank was published in December, before restrictions were escalated by the government amid the worsening winter wave of the coronavirus.

Although growth in 2021 is expected to be limited, subsequent years could see the recovery gain pace, according to Tuesday’s prognosis.

GDP is predicted to grow by 4.5 percent in 2022, and by 2.2 percent in 2023.

READ ALSO: Denmark’s economy hardest-hit since global economic crisis but worst may be over

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‘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.