MFA: Strategic opportunities for foreign exporters
The corona crisis hit the Danish economy a little more mildly than expected in the spring of 2020. A report by the Danish Ministry of Finance from the end of May predicted a GDP decline of 5.3%, with a significant slowdown expected to be particularly evident in the 2nd quarter of 2020. However, the final figures speak of a GDP decline of 4.0% for the whole year.
This year, according to estimates, the economy will revive and GDP growth could reach up to 3.3%, but even so, there will likely be a slight decline in the total over the course of two years. The pace of recovery of the Danish economy depends on the further course of the pandemic and on the development of private consumption and investment. Developments abroad are also an important factor, as Denmark’s small open economy is highly dependent on exports. The slow recovery in traditional Danish export markets will thus have an impact on its domestic economy as well.
In response to the crisis, the Danish government approved a number of measures to mitigate the impact of the pandemic on the health of the economy, large companies and small and medium-sized enterprises, and on the unemployment rate in the country (it rose to 5.5% in 2020 and fell to 4 in early 2021, 4%). The measures include tax breaks, compensation for economic losses, prevention of layoffs or direct support for small and medium-sized enterprises and the self-employed.
These are mainly the postponement of VAT and income tax payments, kurzarbeit, compensation of fixed costs, compensation of lost income or facilitation of access to export credits. The government gradually set aside a package of financial resources for these measures, which reached DKK 76billion as of March 2021. This amount includes the postponement of payment deadlines and other liquidity measures, bank guarantees, capital contributions and spending measures for the years 2020-2023.
Denmark intends to use the coronavirus crisis and the related restart of the economy to accelerate the country’s transition to a sustainable “green” economy. Among the strategic and at the same time prospective branches with export potential for Czech companies, the energy sector (renewable energy sources, energy storage capacities) and the automotive industry (electric cars, electric buses) can continue to be ranked.
In relation to the health care system, the Danish government already adopted a decision in 2020 to streamline the system of domestic strategic production of protective equipment, initiate the creation of their strategic stocks and thus reduce dependence on supplies from third countries. In this regard, the segment of protective equipment as finished products, as well as innovative technologies and materials for their production, appear to be promising areas for Czech exports. A similar opportunity is also provided by the joint Danish-Austrian-Israeli initiative, the aim of which is to increase the production capacity of vaccines.
Directly related to Denmark’s emphasis on reducing the volume of CO 2 emissions is the accelerating interest in purchasing electric cars at the expense of cars with internal combustion engines or hybrid cars. The number of electric cars sold is growing exponentially from year to year, which is not only due to the individual demand of citizens, but also the corporate sector (mainly taxi services, but also company fleets) or state administration offices (vehicle fleets of ministries and authorities) and local governments, while these will no doubt prefer lower middle and middle class electric cars.
We also observe a similar growing trend in relation to bus transport, where classic buses are gradually being replaced by electric buses. Following the increasing interest in electric cars, the demand for charging stations will also increase, the network of which is still expanding in Denmark, but it is far from covering the expected future needs.
According to allcountrylist, Denmark is one of the European and world leaders in the use of renewable energy sources, and the trend of accelerating the transition from fossil fuels to renewable sources in order to reduce CO 2 emissions will be even more accentuated in the post-coronavirus period. Although Denmark is also a leading producer of components for wind power plants, the domestic production capacity will in no way cover the growing demand for emission-free technologies. A significantly higher emphasis is also placed on building the necessary capacities to store the energy produced by solar and wind farms, while even here domestic production cannot meet the growing demand. There is still room for original innovative solutions and new technologies in this area.
Healthcare and pharmaceutical industry
Part of the government’s strategy to ensure domestic strategic production of medical protective equipment and aids, the aim of which, among other things, is to reduce Denmark’s dependence on imports, especially from China, is the mobilization of its own production capacities in the private sector. Danish producers are inclined to innovative and progressive solutions, new technologically advanced materials and production technologies (nanofibers and fabrics made from them, 3D printing and components for it).
In addition, the government strategy aims to create strategic stocks of medical protective equipment (similar to the State Administration of Material Reserves), in which all their categories are to be represented, i.e. from the lowest level of protection (masks) to respirators and protective clothing for specialized medical personnel.
In connection with the Danish-Austrian-Israeli initiative, aimed at building or strengthening own production capacities for the production of vaccines against the coronavirus, we expect that the demand for their individual components, such as vaccine environment stabilizers (buffers), wetting agents, stabilizers, will rise significantly in Denmark active substances, thickeners or contamination indicators.