Denmark: Activity slows down in Q4; economy contracts at sharpest rate since 2009
Economic activity lost some momentum in the final quarter of 2020, according to a preliminary release, with GDP growth clocking in at 0.6% in seasonally-adjusted quarter-on-quarter terms, slowing from Q3’s record quarterly growth of 5.2%. Nevertheless, the economy performed well above the Euro area’s average in the quarter (Q4: -0.6% s.a. qoq; Q3: +12.4% s.a. qoq).
The slowdown was a result of the newly implemented restrictions throughout the quarter to curb the spread of new variants and waves of the Covid-19 virus. As such, despite industrial production growing solidly in Q4, overall growth was capped by the halt in activity in other sectors.
Meanwhile, in annual terms, the economy continued to gradually recover as GDP contracted 3.1% in seasonally-adjusted terms, easing from Q3’s 3.7% fall. As such, early estimates point to an overall contraction of 3.7% for 2020 as a whole.
A more detailed release will be published on 26 February.
Reflecting on the economy during Q4 and the outlook for the coming months, in their January Swedbank Economic Report analysts commented:
“Denmark has been hit hard by the second wave of the virus […] with a large spread of infection and a heavily burdened health care system. Shops, restaurants, bars, and gyms were completely shut down for the 2020 Christmas holidays. Contagion and shutdowns have continued to weigh on the economy at the start of the year, particularly in the services sector. […] As the spread of infection decreases and social restrictions are removed, the economic recovery is expected to pick up beginning in the second quarter of this year.”