Denmark, Sweden economies expected to contract sharply

COPENHAGEN, Denmark – Financial institutions in Sweden and Denmark said on Wednesday, April 1, they expected the countries' economies to contract sharply in 2020 because of the crisis caused by the coronavirus outbreak.

"The boom in the Danish economy has come to an abrupt end in early 2020. The outbreak of the coronavirus and the measures implemented to contain its spread have led to a sharp contraction in economic activity," the Danish central bank said in a statement.

The central bank said it expected Danish gross domestic product (GDP) could contract between 3% and 10% in 2020.

In neighboring Sweden, the country's National Institute of Economic Research (NIER) said that "a particularly deep economic downturn looms."

NIER expected Swedish GDP to contract by 6% in the 2nd quarter alone, and by 3.2% for the full year of 2020.

Both countries have already announced a number of economic measures to mitigate the coronavirus impact, including support for businesses and subsidizing temporary layoff schemes.

NIER said it thought the measures adopted by Sweden were appropriate, but warned that more would be necessary "to stem the rise in unemployment."

The Swedish government earlier this week forecast the jobless rate would rise from 7% currently to around 9% this year, which would be the highest level in 23 years. 

The Danish central bank also noted that more measures could become necessary but this would also be dependent on developments abroad.

"We should not forget that we are also highly dependent on developments abroad. And once the economic restrictions are phased out, more conventional fiscal stimulus will probably be required to underpin demand," Lars Rohde, the bank's governor, said in a statement.

On Friday, March 27, Norway's government announced that GDP could contract between 1.5% and 7% this year. 

The economy of the Nordic country, the largest oil producer in Western Europe, is doubly affected by the effects of the pandemic and the rapid fall in oil prices–