DANISH ECONOMY

The recession is over…
… but the crisis is not

By chief economist Steen Bocian, Danske Bank

After 18 months of economic decline, it looks like the Danish economy is growing again. The recession is over. But the crisis is not – and although there is reason to expect growth, unemployment will most probably continue to rise for a while yet.

The Danish economy was vulnerable when the global financial and economic crisis gained serious momentum during 2008. At that time, Denmark was already in economic recession, driven down by falling house prices, less consumer spending and dwindling activity in the construction industry. Since the financial sector at the same time was vulnerable as a result of high growth in lending in the years before, the Danish economy found itself under pressure. But the political will to address the problems was there, and a combination of instruments targeted at the problems in the financial sector, as well as a traditionally expansive fiscal policy, has helped ease the worst of the crisis. Compared with other countries, Denmark has not fared worse measured by economic activity. GDP has dropped by just under 5% since the peak, which is less than in both Sweden and Germany, Denmark’s two largest trading partners.

If we look at current developments, there is fortunately much to suggest that the crisis is abating. This is due to a combination of factors. Naturally, the fact that economies globally are improving plays an important role. Germany saw growth in the 2nd quarter and Sweden avoided seeing its GDP drop further. The indicators for the 3rd quarter are generally pointing in the direction of global economic recovery after the severe decline we saw at the end of 2008 and during the first half of 2009. That will naturally also rub off on Denmark.

There are however also specifically Danish circumstances. The crisis has given rise to an expansive fiscal policy. Public sector investments have been advanced, tax concessions have been made, and a special savings scheme, into which Danes in employment were forced to pay in the period 1998-2003, has been rescinded – all initiatives whose objective is to increase economic activity here and now.

At the same time the interest rate has fallen quite significantly during 2009. When the financial crisis was raging globally, it also hit the Danish krone, and the Danish central bank was forced to increase the interest rate in autumn 2008 to defend the fixed exchange rate policy. The mission was fortunately successful, and confidence in the fixed exchange rate policy has been maintained throughout the entire crisis. The Danish central bank has thus had the opportunity this year to lower the interest rate even more than the ECB. Having reached 5.75% last autumn, we have seen a decrease which has sent the Danish central bank’s lending rate down to 1.25%, its lowest ever level.

The multiple stimuli are expected to lead to growth. But it will be fragile growth. The Danish economy has lived through its worst crisis since the 1930s, and we have not yet seen an end to adjustments in the labour market. There is fear of unemployment undermining the upswing. So there are no guarantees – we just have to feel relieved that we are experiencing a clear improvement here and now.

Skykon A/S
http://www.skykon.com
Skykon A/S is the parent company of a range of businesses in the rapidly growing wind power market. Skykon A/S delivers total solutions in towers and wind technology components for wind turbine manufacturers. Skykon A/S owns Dencam A/S, Welcon A/S, Welcon Towers Ltd., Marxen A/S and WKT Nordic A/S – businesses that are market leaders in their respective areas. Skykon’s businesses in total employ 420 employees and have an annual turnover of approximately 1.1 billion kroner.

Danske Fragtmænd
http://www.fragt.dk
Danske Fragtmænd A/S – a Logistics Operator with Quality and Service in their DNA. Danske Fragtmænd is a leading provider of distribution solutions in Denmark with more than 100 years of experience. We provide business-to-business solutions in all sectors. Every day more than 40,000 consignments are distributed via our fine-meshed service network. Throughout our long history, quality and service have ensured our customers a level of supply security that is second to none. We manage warehousing facilities of more than 160,000 m², offering turnkey logistic solutions as well as storage and distribution, ensuring round-the-clock service

Billund Airport
http://www.billund-airport.dk
If you are looking for new ways to new markets, Billund Airport is your gateway to northern Europe. Billund Airport, and the handling companies at Billund Airport, operates around the clock and connects easily with other modes of transportation. The cargo facilities on airside are directly linked to the platform for loading and unloading of aircraft. Cargo Center Billund is located just beside the runway, making the transportation time from airplane to warehouse extremely short.

Per Aarsleff A/S
http://www.aarsleff.com
Per Aarsleff A/S is a company of civil engineering contractors with 3,300 employees and an annual revenue at €715 million, 30% from work performed abroad. In Denmark and our neighbouring countries we contract to execute infrastructure projects such as harbours, site developments, railways, roads, tunnels, reservoirs, pipe installations and water supply. In addition, we specialise in piling and No-Dig renewal of underground pipelines. We have our own production of piles in Denmark, UK, Poland and Sweden. Our main markets for pipe renewal are in Denmark, the Baltic States and Central Europe. In addition we execute one-off contracts in most parts of the world.

Niels Brock Copenhagen Business College
http://www.brock.dk
Internationalization is an integrated part of everyday life at Niels Brock Copenhagen Business College - the largest provider of business education in Denmark. Niels Brock works with three high-priority areas within internationalization of business education:
1. Sending students and teachers abroad to study or on a work placement/work training programme
2. Attracting well-qualified students and teachers to Niels Brock programmes delivered in Copenhagen. Niels Brock has approx. 500 international students.
3. Exporting educational know-how to non-EU countries, with a focus on Asia. Since 1996 Niels Brock has been selling educational know-how to China and the first joint programme was set up in 2000.