Denmark GDP declined by 1.5% during Q1
2According to Statistics Denmark's indicator fell GDP by 1.5%. This follows an increase of resp. 0.7% and 6.3% in the last two quarters of 2020, Helge J. Pedersen writes for Nordea.
"Last year, GDP fell by 1.3% in the first quarter and as much as 6.7% in the second quarter during the first shutdown of Denmark in peacetime. The economy is doing much better now than last year partly because the Danes have learned to live with restrictions, and partly because 2020 actually turned out to be completely different than feared when the pandemic hit Denmark.
"Partly as a result of the internationally coordinated and historically large easing of economic policy, house prices rose exorbitantly, purchasing power rose and wealth reached record highs.
"The expansive policy has continued this year with the disbursement of so far just over 34 DKKbn from the frozen holiday pay. It gives a good boost to private consumption and, together with the roll-out of the vaccination program, helps to support consumer and business confidence, which also benefits from the strong recovery in the Western world led by the United States.
"The flash indicator measures the development from the production side and it shows that it was the industrial production that kept the wheels of the economy roughly going in the first quarter of the year. However, as society reopens, the service sector will once again pick up speed. It will be visible in the figures for the second quarter, which must be expected to be strong.
"Due to the lockdown Denmark fared worse than many other countries in the first quarter.
"Thus, there was a decline in resp. the euro area and the EU at 0.6% and 0.4% over the quarter. In two important neighboring countries, Sweden and Germany, there was a very different development. The Swedish economy grew by 1.1% over the quarter, while the German economy shrank by 1.7%. In the US, GDP increased for comparison by 1.6% in the first three months of the year.
"These figures indicate that our new forecast, which predicts growth of around 3%, may well be optimistic. But much can still happen and it is too early to completely write it off.
"It must be emphasized again that there is still great uncertainty associated with the calculation of GDP because the statistical basis is deficient. It covers both the lack of information about the development in the companies' turnover, not least the service industries, but there is also a methodological uncertainty associated with the development in public consumption." ■