Denmark’s economy expanded for the third consecutive quarter as Novo Nordisk A/S and other Danish drugmakers enjoy massive demand.
Gross domestic product grew 0.2% in the second quarter from the previous three months, according to an indicator published on Tuesday by Statistics Denmark which had earlier revised an expansion in the third quarter of last year to no growth. The agency will publish its full report on second-quarter GDP on Aug. 31.
Denmark has outperformed most of its rich peers since the pandemic, but the contribution of pharmaceutical companies to Danish output has triggered worries it may be concealing weaknesses elsewhere in the economy.
The growth in the second quarter is in particular driven by an “exceptionally strong Danish pharmaceutical sector,” Palle Sorensen, chief economist at Nykredit A/S, said in a note to clients. “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.”
Second-quarter GDP would have contracted without the Danish pharmaceutical industry, whose performance is driven especially by Novo’s success, said Las Olsen, chief economist at Danske Bank A/S, in a note.
“There is no doubt that many companies in other industries are feeling more headwinds,” he said, highlighting other industrial firms and the construction sector, where “there are clear signs of a turn for the worse.”
Read more: Novo Nordisk’s Growth Camouflages Weak Spots in Danish Economy
Calculations by Sydbank A/S show that the Danish economy would have stagnated since the end of 2021 had it not been for the pharmaceutical industry. Novo’s meteoric rise has pushed its market value above Denmark’s GDP. The drugmaker last week raised its profit and sales outlook for 2023 as demand for its new weight loss drug Wegovy and another diabetes medicine fuel revenue growth.
Industrial production in Denmark increased by 4.2% on the quarter in the same period, but would have shrunk by 4% if measured without the pharmaceutical industry, Statistics Denmark said earlier this month.
The IMF in June raised from its forecast for Danish GDP, expecting the economy to grow 1.3% in 2023, from a previous estimate of 0.5%.
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