Denmark Raises Growth Forecast as Novo Expands Output

(Bloomberg) -- Denmark’s government now predicts the economy will expand 2.7% this year, almost double the rate it previously estimated, accelerated by the Scandinavian country’s flourishing pharmaceutical company Novo Nordisk A/S.

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The economy ministry raised its 2024 gross domestic product growth forecast from a December estimate of 1.4%. In 2025, GDP is expected to rise 1.8%, up from 1% seen previously.

Pharmaceuticals and raw material extraction, including the reopening of the Tyra North Sea gas field, will be key drivers of economic growth, the ministry said in its spring economic review. Without these two industries, Denmark’s GDP would grow just 1.6% this year, and 1% in 2025.

The growth of Danish drugmaker Novo Nordisk is in particular bolstering Danish exports despite sluggish purchasing power among trading partners, the ministry said, raising its export growth forecast to 7% this year, from 4.2% previously. Efforts by Novo to expand production capacity is also boosting investments within construction in the short term, and in machinery over the longer term, it said.

Novo is ramping up production of its blockbuster diabetes treatment Ozempic and weight-loss medicine Wegovy to meet excessive demand, investing in new and existing manufacturing facilities. The success of these drugs has transformed Novo into Europe’s most valuable company and been a key driver of Danish economic growth in recent years, triggering worries over the small country’s reliance on the drugmaker.

The government’s new 2024 forecast is significantly above the consensus estimate by analysts surveyed by Bloomberg, at 1.9%, and would make Denmark the fastest-growing economy in the G-10 space of major currency holders this year, based on data compiled by Bloomberg.

Read: Ozempic Maker Novo Nordisk Has Denmark’s Economy Hooked

“It’s an absolute rarity that the government makes such a significant upward adjustment of the forecast,” said Tore Stramer, chief economist at the Danish Chamber of Commerce. The move reflects that Novo has undergone “a surprisingly strong production increase at the end of 2023 and into 2024,” he said.

Read: Novo’s Weight-Loss Drugs Have ‘Huge Fan’ in Denmark’s Premier

Last year Denmark’s economy expanded 1.9%, but would have stagnated without Novo’s contribution. The drugmaker was also behind a fifth of all new jobs created in Denmark in 2023, according to the chamber of commerce.

Denmark’s Prime Minister Mette Frederiksen earlier this week said she’s a “huge fan” of Ozempic and Wegovy, openly showing support for the pharmaceutical giant as it faces mounting criticism over pricing in the US.

The new forecast comes after the government on Wednesday lowered its estimate for the Nordic country’s financing need this year.

--With assistance from Ott Ummelas.

(Adds more details from report in fourth paragraph, consensus estimates in sixth)

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