Danish Central Bank Sees Risk of Slow Recovery From Crisis
Denmark’s central bank warned of the risk of a slow recovery from the historic recession triggered by Covid-19.
Gross domestic product will contract 4.1% this year, the Copenhagen-based bank said on Wednesday. It expects growth of 4.2% in 2021.
“Over a few months, national lockdowns have caused unemployment to soar –- in some countries to record levels,” Governor Lars Rohde said. “The risk of a prolonged economic recovery is considerable.”
Denmark was one of the first countries in Europe to shut down its economy back in mid-March. The strategy has coincided with a sharp drop in the Covid-19 contagion rate, paving the way for a swift unwinding of restrictions on movement.
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The central bank’s latest forecast is less pessimistic than its prediction in April, when it saw GDP contracting 10% in a worst-case scenario.
Denmark’s government has announced aid measures equivalent to more than $75 billion, and is now slowly winding down parts of its emergency program.
“The fiscal stimulus agreed in the Parliament contributes to a more smooth business cycle when the relief packages are terminated,” Rohde said. “If the recovery becomes weaker than expected, further easing may be needed next year and the year after.”
|Real growth from year before||2019||2020||2021||2022|
|Public balance as % of GDP||+3.7||-5.8||-2.0||-1.8|
|Consumer prices YoY (%)||+0.7||+0.2||+0.9||+1.2|
|House prices YoY (%)||+3||-2.3||+2||+5.4|
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