Danish economy hit hard by second lockdown but optimism remains

The Danish economy shrank by 1.5 percent in the first quarter of this year as businesses remained shuttered during a national Covid-19 lockdown.

Danish economy hit hard by second lockdown but optimism remains
Denmark has seen its worst economic results in years since the arrival of the coronavirus pandemic, but experts are hopeful over a recovery. Photo: Emil Helms/Ritzau Scanpix

The figure, based on the change in GDP from the preceding quarter, Q4 in 2020, is a preliminary indicator published by Statistics Denmark on Monday. The number can be adjusted as more data is received.

It represents the second-largest economic decline over a single quarter since 2009, during the Global Financial Crisis.

Only Q2 in 2020 — when the original coronavirus lockdown occurred — saw a bigger downturn during a three-month period. Then, GDP shrank by as much as 6.7 percent.

The second national lockdown, which came into full effect on December 25th last year, was in place for much of the first quarter of 2021. Non-essential retail, for example, was allowed to reopen on March 1st.

Restaurants, bars and cafes were closed throughout the entire quarter and reopened in April.

“The fall in GDP in the first quarter of 2021 is not as big as the fall during the more extensive lockdown in the second quarter 2020,” Statistics Denmark wrote in a report.

That is a source of encouragement, according to an analyst who spoke to news wire Ritzau.

“We have got better at living with the pandemic and businesses have made online solutions which customers have embraced,” said Søren Kristensen, senior economist with Sydbank.

“At the same time, many countries around us kept their factories open, which enabled Danish sub contractors to export their goods,” Kristensen added.

Last year saw Denmark’s economy shrink by an overall 2.7 percent, the largest decline since 2009.

Government projections suggest 2021 will see the beginning of a recovery with growth of 2.1 percent followed by a further 3.8 percent growth in 2022.

Kristensen said he shares that optimism.

“A very large amount of money has been saved up and we expect a lot of that money to go out into the economy in turn with people being allowed to travel and go out to eat,” he said.

READ ALSO: Denmark’s economy ‘worst hit’ in Nordic countries by coronavirus

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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.