Danish economy hit hard by second lockdown but optimism remains

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

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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