In a matter of a several months, the coronavirus pandemic has sent the Danish economy into a free fall.
The country's Finance Ministry is forecasting an economic downturn for Denmark in 2020 worse than the financial crisis of 2007-08. All in all, the nation's GDP is expected to fall by an estimated 5.3 percent, leading to a spike in unemployment, especially within the hotel and restaurant sector; meanwhile, housing prices are plummeting.
“There is no reason to hide what a serious situation we've found ourselves in”, Finance Minister Nicolai Wammen told Danish Radio.
In April, the Finance Ministry presented three economic scenarios for the Danish economy, one positive, one medium and one negative. A decline of 5.3 percent or DKK 100 billion ($15 billion) would put the Danish economy somewhere between the government's medium and negative scenario.
“It will be a marathon where there is no single tool that can solve all the problems, but where we must constantly come up with initiatives to uphold Danish jobs,” Wammen mused.
Meanwhile, Danish Radio's economic expert Casper Schrøder described the upcoming dive as “the biggest blow to the Danish economy since World War II”.
During the lockdown measures, Denmark saw the biggest jump in seasonally adjusted unemployment since the Great Depression of the 1930s, the newspaper Finans reported. According to the Finance Ministry, a total of 307,000 jobs in a country of 5.8 million have been affected by the crisis.
Whereas the number of registered unemployed jumped by nearly 50,000, a further 205,000 jobs are currently supported by the government's wage compensation scheme and another 50,000 self-employed people and freelancers are covered by a similar arrangement.
According to Danish Radio, a total of DKK 400 billion ($60 billion) has been spent in Denmark on trying to preserve jobs and businesses and mitigate the effects of the COVID-19 crisis. To find the means for the aid packages, Wammen announced a DKK 300 billion ($45 billion) loan, wholly DKK 207 billion ($31 billion) more than initially expected.
While Danes are expected to spend 3 percent less than usual this year, the Finance Ministry sees the possibility of 4 percent GDP growth in 2021. However, there is great uncertainty surrounding the pace of recovery and consumer confidence rebound.
So far, Denmark has seen a total of 11,512 confirmed COVID-19 cases, 568 deaths and over 10,000 recoveries. The country is already gradually unwinding its lockdown measures.