At first sight, this figure may seem insignificant.

Monday’s figures from Statistics Denmark reveal that industrial production in Denmark fell by 1.1% from July to August this year.

Nonetheless, Morten Granzau, Chief Economist at DI, finds the figure disconcerting. The fact is that, if one disregards the pharmaceutical industry, industrial production has actually dropped significantly more.

“If we look at the past three months compared to the previous three months, at the same time disregarding the manufacture of medicines, medical instruments and medical aids, we are currently witnessing the biggest decline in industrial production since 2012,” he says.

Denmark is special, in so much as its domestic industrial production has so far been vaccinated against the recession experienced by other global industry - partly thanks to the pharmaceutical industry.

“Despite international recession Industrial production has remained at a high level, because our major pharmaceutical industry is more resilient to the ups and downs of the international economy,” says Morten Granzau.

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Some Industry Already Affected

DI’s Chief Economist explains that industry in Denmark is by no means immune to the development of the international economy, and that the slowdown in the global economy has already impacted some elements of industrial production.

“Danish companies that are part of global value chains are significantly affected by the international economic recession. One particularly unfortunate example is Denmark’s manufacture of parts for motor vehicles. This year it dropped by 15%. Global trade war and overcapacity have had a severe impact on Germany’s car industry. As a result, Danish manufacturers have paid a price,” he says.

See also: DI: Pharmaceuticals and machinery ensure Danish export growth

Rubber Ducks Don’t Float in Empty Bathtubs

Morten Granzau also emphasises that a small decline in Danish industrial production can quickly turn into a major downturn, if the recession in the international economy increases.

“Overall, industrial production here in Denmark has been a bit like a rubber duck. It has been floating on the water, supported partly by the impressive growth figures of the pharmaceutical industry. But if suddenly there’s no more water left in the bathtub, Danish industrial companies will sink,” says DI’s Chief Economist.

Almost 300,000 people are directly employed in the industrial sector in Denmark. Industrial production and turnover are the first figures that provide a tangible picture of development in the Danish economy. In other words, industrial production is a good benchmark vis-à-vis Denmark’s economy.

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