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Source: Danmarks Nationalbank

17 June 2020

The coronavirus outbreak has caused an unprecedented downturn in the Danish and international economy.

In a new projection for the Danish economy, Danmarks Nationalbank estimates that the gross domestic product, GDP, will contract by 4.1 per cent this year. Next year, a partial recovery of economic activity is expected, with a 4.2 per cent expansion of GDP, while GDP growth in 2022 will be 1.6 per cent.

“Over a few months, national lockdowns have caused unemployment to soar – in some countries to record levels. The risk of a prolonged economic recovery is considerable,” says Governor Lars Rohde, Danmarks Nationalbank.

With the reopening of the economy and the termination of the relief packages the Danish economy is entering a new phase. Adaptation to changed production and consumption patterns is supported by the new measures agreed.

“The fiscal stimulus agreed in the Parliament contributes to a more smooth business cycle when the relief packages are terminated. If the recovery becomes weaker than expected, further easing may be needed next year and the year after,” says Lars Rohde.

Measures should be organised to retain the good structures that have helped to provide a healthy foundation for the Danish economy.

The Danish economy depends on access for Danish corporations to efficient export markets with purchasing power. Denmark should support international coordination and cooperation to ensure a healthy and robust international economy. This is key for Danish growth and prosperity.

The projection outlook is subject to exceptionally high uncertainty. The reason is that the performance of the economy is driven by the evolution of the virus outbreak and treatment options. The fiscal response of the major countries is also essential

Enquiries can be directed to press advicer Ole Mikkelsen on tel. +45 3363 6027.

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