How has Denmark’s economy responded to start of 2022?

Results from the first quarter of 2022 indicate that Denmark’s economy saw a slight downturn during the period.

danish stock exchange
Denmark's economy has stagnated slightly so far in 2022 following a strong end to 2021. Photo: Jens Nørgaard Larsen/Ritzau Scanpix

The national data agency, Statistics Denmark, estimated on Monday based on preliminary data that the economy shrank by 0.1 percent in the first three months of this year.

The measure of the economy comes from an indicator of the national GDP.

Statistics Denmark notes that the preliminary figures are subject to uncertainty, due in part to the Covid-19 pandemic.

Nevertheless, a measured reduction to GDP by 0.1 percent in the first quarter of 2022 is likely to be related to changes in the public sector and a downturn for household service industries, the agency writes.

A major factor in reduced public spending is the phasing-out of government-funded responses to the Covid-19 crisis, notably the national testing programme, an analyst suggested.

READ ALSO: Covid-19: Denmark halves test capacity due to low infection numbers

“It’s primarily a fall in activity in the public sector that has driven a drop in GDP in the first quarter,” senior economist with the Danish Chamber of Commerce, Tore Stramer, told news wire Ritzau.

“The phasing-out of the test programme and similar activities from February onwards has simply lowered activity markedly in the health sector,” he said.

Despite the overall drop in GDP, sectors including industry, construction and business services had a strong quarter.

The results should also be seen in the context of a strong end to 2021 for the Danish economy.

A light downturn in recent months is not unexpected, said Morten Granzau of the Confederation of Danish Industry (Dansk Industri, DI).

“The trend will probably continue because of very high inflation along with the effects of the war in Ukraine and sanctions against Russia,” Granzau said.

“We are heading towards a new economic reality,” he said.

READ ALSO: Food and energy prices rocket as Danish inflation hits 40-year high

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Covid-19 cost Denmark’s health service four times more in 2021 than in 2020

New data from official agency Statistics Denmark has highlighted the cost of the Covid-19 pandemic to the country’s health services in 2021.

Covid-19 cost Denmark’s health service four times more in 2021 than in 2020

Coronavirus cost the health system 20.1 billion kroner last year according to Statistics Denmark, which has calculated overall costs for the health service related to Covid-19 in 2021.

The figure is almost four times higher than in 2020, the year the pandemic broke out, when it was estimated to have cost the health service 5.1 billion kroner.

Extra costs related to testing, contact tracing and vaccination in 2021 are the primary reasons for the dramatically increased spending compared to the previous year.

Testing and contact tracing cost 12.5 billion kroner last year, compared to 1.7 billion kroner in 2020.

Vaccination against the coronavirus – which did not commence until December 2020 – ran up a cost of 4.4 billion kroner in 2021.

Treatment of Covid-19 patients was a lower expense for health services, setting them back 0.9 billion kroner.

Overall spending by the Danish health service was up by 270.8 billion kroner in 2021. That represents a 25 percent increase, most of which can be attributed to additional costs related to the Covid pandemic.

Out-patient health centres, such as Covid-19 testing centres, were an area in which some of the steepest increases in spending occurred.

Dentistry services were also a higher cost to the Danish health service in 2021 than in 2020, although this is attributable to a reduction of activity in the sector during lockdowns in 2020.

Hospitals spent 116.8 billion kroner, 3.1 billion or 2.8 percent more than in the previous year.

The average annual increase in spending on hospitals in Denmark’s health service in recent years is 2.7 percent.

The Danish public health service cost the equivalent of 10.8 percent of the national GDP in 2021.