Danish economy could shrink by up to 6% in 2020 due to coronavirus

One of the first countries in Europe to plan for a return to normal from the emergency measures caused by COVID-19, it has now calculated the economic cost of long-term isolation over the early resumption of activity.

Having virtually closed Denmark a month ago – earlier than most European countries – Prime Minister Mette Frederiksen recently adopted plans to rebuild parts of the economy next week. On Thursday, the country’s finance ministry provided some data to show what this could mean.

And so – Denmark’s economy may shrink by 3% to 6% this year as businesses suffer the effects of restrictive measures due to the coronavirus, Finance Minister Nicolai Wammen said today. “We are seeing a heavy blow to the Danish economy”, said Nicolai Wammen at a briefing.

The second quarter is likely to be the darkest chapter in Denmark’s economic history, he adds.

Last week, the Danish central bank forecasts an economic contraction of between three and 10% depending on the duration and strength of the crisis, with the main scenario being a 5% contraction.

On Thursday, Nicolai Wammen said the government offered loans of up to 35 billion DKK (5.1 billion USD) to small and medium-sized enterprises. The loans are in addition to the measures already announced to support businesses worth 287 billion DKK, including direct aids that will cost the state more than 60 billion DKK.

Denmark was one of the first European countries to respond to the COVID-19 pandemic by closing schools, restaurants and cafes as part of the requirements for social distance. Mette Frederiksen said on Monday that the country’s early response is the key to a relatively stable incidence and rate of infection. As a result, the government considered it safe for many schools to reopen next week and began discussions with business leaders on how best to resume normal workflows.

The country reported 218 coronavirus-related deaths, and the number of hospitalizations with COVID-19 has declined since last week.