DENMARK

GEOGRAPHY

Denmark is a sovereign state located in Northern Europe. Denmark is a combination of the Jutland Peninsula and its large archipelago of more than 440 islands. The coastline of Denmark is an impressive 7,300 kilometers, making the country ideal for harbors, fishing, as well as beaches for the tourism industry. On the south end of Denmark lies a 68 kilometer border which is shared with Germany. The largest peninsula is known as the Jutland Peninsula, which is divided in to regions as well. On the eastern portion of Denmark lies the Zealand region, also known as Sjaelland. The island of Bornholm is the eastern most in Denmark, and is found to the south of Sweden and to the North of Poland. Copenhagen is the Capitale of Denmark. Then come Arhus and Odense as dynamic cities with great tourist activities.

The climate of Denmark is marked as temperate, where the summer season is generally cool and the winters fairly colder. However, in some portions of the country, there is ample sunshine, great for tourists who like to spend their days at the beach. The warmest months are generally in July and August, and the coldest ones in February and March.

HISTORY

The Danish monarchy is one of the oldest in the world. Queen Margrethe II’s heritage can be traced back more than a thousand years to a king believed to be born around year 900.

Queen Margrethe II (born 1940), has been Denmark’s reigning monarch since 1972. Her son Crown Prince Frederik (born 1968) will be the next one to succeed to the throne, part of a line that reaches all the way back to Gorm the Old (believed to be born around year 900) and Harald Bluetooth (born around 940). Prince Frederik’s son Christian (born 2005) will continue the line into the future. 

Today’s Danish monarchy doesn’t spend a lot of time on pomp or circumstance. The children of the Royal Family attend ordinary public schools, and the adult members of the family are often seen shopping, dining, or riding their bicycles in public just like any other Dane. But the Royal Family plays an important symbolic role, both at home and abroad. In Denmark, they promote good causes and welcome foreign heads of state at glittering state dinners. They visit Greenland and the Faroe Islands, which are part of the Kingdom of Denmark. Outside of the country, they head delegations that promote Danish products and Danish businesses. 

The Danish monarch has a limited role in the government of Denmark under the Danish constitution. After a national election, the new coalition of ruling parties presents a government for the monarch’s approval, upon which time she officially appoints the new regime. The monarch also formally approves each new law passed by the Danish parliament, the Folketing, including the ceremonial approval of each new Danish citizen.

SOCIAL CULTURE AND RELIGION

Denmark often comes out near the top of global surveys on liveability and happiness. How can a small country with difficult weather be such a wonderful place to live?  Denmark has extremely high levels of social trust. People trust each other and trust institutions like the government, the monarchy, the hospitals, and the police. Trust is an important part of the business environment, too. People are assumed to be honest unless proven otherwise.The high levels of social trust also help persuade Danes to pay some of the world’s highest taxes to finance an extensive set of welfare programs. The Danish health system is tax-funded and free for the patient. Danish schools and universities are also funded by taxes and free for students. The idea is that everyone must contribute to the community and in return, the community will help care for all. These values of trust and community are deeply embedded in Danish culture and society and have their roots in Danish history. According to the World Happiness Report, happiness is closely linked to social equality and community spirit – and Denmark does well on both. Denmark has a high level of equality and a strong sense of common responsibility for social welfare. Even though there are nine major political parties in Denmark, none of them seriously supports dismantling the Danish welfare state. People living in Denmark pay some of the world’s highest taxes – up to half of their income. On top of this, Danes pay a 25 % value-added tax on most items, and a tax of up to 150 % on new cars. But most Danes will tell you that they are happy to pay taxes because they can see what they get in return. Most healthcare in Denmark is provided with no fee to the patient. University students pay no tuition and receive a grant to help cover expenses while studying. Childcare is subsidised. And the elderly receive pensions and are provided with care helpers who visit them at home. Most Danes believe that it is everyone’s responsibility to work if they can, and pay taxes to support the common good. If everyone pays their fair share, a social safety net can remain in place to support the very young, the very old, and the sick. The social safety net also supports people who lose their jobs for up to two years while they look for new jobs, although a system is in place to make sure they are actively looking for work.

POLITICS

The leader of the Social Democrats Mette Frederiksen was appointed Prime Minister following the 2019 elections, leading a single-party government (48 seats out of 179), which however has the support of the “red bloc”, consisting of the Social Liberals (16 seats), Socialist People’s Party (14 seats), the Red–Green Alliance (13 seats), the Faroese Social Democratic Party and the Greenlandic Siumut. The opposition (“blue block”) is formed by “Venstre” (43 seats, conservative-liberal party), the right-wing Danish People’s Party (16 seats), the Conservative People’s Party (12 seats), the green party “Alternative” (5 seats) and the right-wing party “New Right” (4 seats).

Much of the political debate in 2020 has been characterized by the COVID-19 epidemic. Denmark has been one of the first countries introducing restrictive measures, but also one of the first to restart activities after the first wave, which prompted domestic and international praise for Frederiksen’s government. In November 2020, however, the government was criticized for the decision to move ahead with a mass cull of the country’s mink population after a mutation of the COVID-19 was discovered. The protests led to the resignation of the agriculture minister.

ECONOMY

Being a small country with an open economy and a structural balance of payments surplus, Denmark’s economy – although prosperous – is highly dependent on foreign trade. This is why the country recorded its deepest fall in GDP in the first half 2020 due to the COVID-19 crisis (-7.7% y-o-y only in Q2), although it partially recovered during the second half of the year underpinned by private consumption, for an overall decrease of 4.5% (IMF). As both domestic and external demand normalises, Denmark’s real GDP is forecast to expand by a solid 3.5% in 2021 and around 2.5% in 2022. The European Commission projects private consumption to rebound 4.7% in 2021 and around 3% in 2022, but high levels of uncertainty remain as companies may postpone or cancel investment decisions. The country’s public accounts are quite healthy, with one of the lowest debt-to-GDP ratio in Europe, although the measures taken by the government to address the crisis led to an increase (34.5% of GDP in 2020). The ratio is expected to keep increasing this year and the next (39.3% and 42.6%, respectively) as a result of GDP contraction, large stock-flow adjustments due to significant tax deferrals and significant government deficit. The agricultural sector only accounts for 1.4% of the GDP and employs 2% of the population (World Bank, 2019). Approximately 60% of the Danish land is used for agriculture, and there are more than 50,000 farmers in the country, which is a major exporter of agricultural products (meat, fish, and dairy, among others). Denmark produces enough food to feed 17 million people, three times its population. Nearly 90% of the country’s agricultural revenue comes from livestock production. The organic market in Denmark is proportionally the biggest in the world, with organic food making up roughly 12% of the total retail food market. According to the World Farmers’ Organization, the impact of COVID-19 on the Danish agricultural sector has been relatively modest, as the increase in domestic demand mitigated the export-related losses. Industry employs around 18% of the active population and contributes 20.9% of GDP. The major activity sectors are the chemical, pharmaceutical and biotechnology industries, with niche industries in renewable energy and biotechnology. Denmark has limited natural resources, a fact that slows down the development of its heavy industry. However, the country has enough oil and gas reserves to ensure its energy independence. Uranium mining has been authorised to begin in the autonomous Danish territory of Greenland. Denmark is the world’s leading manufacturer of wind turbines and exports the vast majority of its production. The Danish industry sector seems to have resisted well to the headwinds caused by the COVID-19 crisis, as the industrial production index in the manufacturing sector was at a level of 108.5 (with 2015 as the base value) in October 2020, compared to the level of 119 recorded at the end of 2019. The services sector contributes almost three-quarters of GDP (64.9%) and employs the largest share of the population (80%). Denmark has a strong banking sector, characterised by a high degree of concentration: domestic banks own more than 85% of the total assets, and three banks control 50% of total assets. The tourism sector is becoming a growing source of income for the country. Trade and transport services are also important for the country’s economy (Denmark is the world’s fifth-largest shipping operator). With roughly 33.3 thousand unemployment registrations as of November 2020, employees working in travel agencies, cleaning, and related services accounted for the highest number of unemployed people, followed by those in the trade sector (with nearly 30 thousand dismissals) and in the restaurants and hotel sector 23.4 thousand dismissals

INTERNATIONAL RELATIONS

Denmark has historically been renowned as a nation of traders, with an economy extremely open to foreign trade: in 2019, trade represented 105% of the country’s GDP (World Bank). The country mainly exports pharmaceuticals, electric generating sets and rotary converters (wind turbines, of which Denmark is the leading manufacturer worldwide), meat, mineral fuels (including oil), and engines and motors. Its main imports are motor vehicles, pharmaceuticals, petroleum oils and telephones. The country is the world’s fifth-largest shipping operator and transportation was the main imported and exported service in 2019. Like most of the countries in the world, in 2020 Denmark’s international trade was seriously disrupted by the COVID-19 pandemic, with an estimated reduction of 9% for exports and 8% for imports (IMF). However, both indexes are expected to rebound in 2021, at 7.5% and 7%, respectively; though much will depend on the global sanitary evolution of the pandemic. In 2019, Denmark’s main trading partner were Germany (13.7%), Sweden (9.9%), Norway (5.8%), the United Kingdom (5.5%), the Netherlands (4.9%) and the US (4.7%). The country’s imports principal origins were Germany (21.6%), Sweden (12%), the Netherlands (7.9%), China (7.3%) and Norway (4.2%). Considered as a whole, the European Union was Denmark’s main importing and exporting partner. Denmark has a structural trade balance surplus (2009 being the last time the country had a negative balance). In 2019, Denmark exported goods worth USD 110.7 billion and USD 74.3 billion of services (+1% and -4.7%, respectively), while imports decreased to USD 97.8 billion for goods (-4.7%)  and remained stable at USD 71 billion for services (data by WTO). According to data by the World Bank, in 2019 the overall trade surplus for goods and services stood at around 6.7% of GDP, up from the 2018 level (6%).