Denmark Economic Forecast

Denmark Economic Outlook

June 2, 2020

The economy contracted sharply in the first quarter due to lower consumption, investment and exports, although Denmark still performed notably better than the EU average. The country is in the midst of a much steeper downturn in Q2 as the full effect of containment measures adopted in mid-March is felt. In April, retail sales fell sharply and the manufacturing PMI moved deeper into contractionary territory, while business and consumer sentiment were deeply pessimistic through May. More positively, the government has had success at containing new Covid-19 cases and has significantly lifted lockdown restrictions in recent weeks, with schools, shops and restaurants now open again. Coupled with generous fiscal support, this should be supporting activity somewhat.

Denmark Economic Growth

The economy is seen contracting at the sharpest pace since 2009 this year. Even though many domestic restrictions are being lifted, some remain, which will hamper private consumption. Moreover, weak activity abroad will hurt exports. Nevertheless, strong fiscal stimulus will limit the contraction. A possible second wave of infections poses a downside risk. FocusEconomics analysts see a contraction of 5.0% in 2020, which is down 0.9 percentage points from last month’s forecast, before growth of 4.3% in 2021.

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Denmark Facts

Value Change Date
Bond Yield-0.15-1.54 %Jan 01
Exchange Rate6.66-0.57 %Jan 01

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