Denmark’s economy continues to show signs of growth, expanding for the third consecutive quarter. This positive trend can be attributed to the success of Danish pharmaceutical companies, such as Novo Nordisk, which has experienced high demand for its weight-loss drug, Wegovy. In the second quarter, Denmark’s gross domestic product (GDP) grew by 0.2% compared to the previous three months. This growth has outperformed many other rich continental peers, showcasing the resilience of the Danish economy during the pandemic.
However, concerns have been raised regarding the reliance on the pharmaceutical sector and its potential to mask weaknesses in other areas of the economy. Palle Sorensen, chief economist at Nykredit, noted in a research note to clients that the growth in the second quarter was primarily driven by the exceptionally strong performance of the Danish pharmaceutical sector. He stated, “Production in the pharmaceutical sector has been so massive that it has pulled the entire economy up. Without it, the picture would probably have been completely different.”
Las Olsen, chief economist at Danske Bank, echoed these concerns, stating that the success of the pharmaceutical industry has overshadowed the challenges faced by companies in other sectors. Olsen highlighted the struggles of industrial firms and the construction sector, where there are clear signs of a downturn. It is evident that the pharmaceutical industry has been a significant driving force behind Denmark’s economic growth, and without it, the country’s GDP would have contracted in the second quarter.
Sydbank’s calculations further emphasize the importance of the pharmaceutical industry to Denmark’s economy. Their analysis shows that the Danish economy would have stagnated since the end of 2021 if it were not for the contribution of the pharmaceutical sector. Novo Nordisk, in particular, has experienced a meteoric rise, with its market value surpassing Denmark’s GDP. The company recently raised its profit and sales outlook for 2023, driven by the high demand for Wegovy and another diabetes medicine, which has fueled revenue growth.
While the pharmaceutical sector has been thriving, other industries have been facing headwinds. Statistics Denmark reported that industrial production in Denmark increased by 4.2% in the second quarter. However, without the pharmaceutical industry, it would have shrunk by 4%. This highlights the contrasting fortunes of different sectors within the Danish economy.
The International Monetary Fund (IMF) has also taken note of Denmark’s economic performance. In June, the IMF raised its forecast for Danish GDP, expecting the economy to grow by 1.3% in 2023, up from the previous estimate of 0.5%. This upward revision reflects the confidence in Denmark’s ability to sustain its economic growth, albeit with concerns about the reliance on the pharmaceutical sector.
Overall, Denmark’s economy has shown resilience and growth, largely driven by the success of its pharmaceutical industry. While this has been a positive development, there are concerns that it may be masking weaknesses in other sectors. As the country moves forward, it will be crucial to ensure a balanced and diversified economy to sustain long-term growth and stability.