BREAKINGVIEWS-Denmark can live with its Novo-based Dutch disease

By Aimee Donnellan

DUBLIN, Sept 12 (Reuters Breakingviews) - Denmark has its own strain of “Dutch disease”. In the 1960s, a surge of income from newly discovered natural gas fields in the Netherlands sent the low country’s currency soaring and hurt exporters. In 2025, $243 billion Novo Nordisk NOVOb.CO poses a similar headache for Copenhagen – but one that is becoming less acute.

Novo, which makes weight-loss drug Ozempic, has been a key driver of the Danish economy in recent years. Without the Novo-dominated pharmaceutical industry, overall Danish growth would have more than halved to around 1.2% last year, according to the national statistics office. The group employs 1% of Denmark’s workforce and contributed one-fifth of total employment growth between 2019 and 2024, according to the national economy ministry.

One problem is that snowballing demand for Ozempic has helped Danish goods exports jump from less than 800 billion Danish crowns ($125 billion) in 2017 to over 1 trillion crowns in 2023, widening the current account surplus. Normally that would mean the Danish currency would appreciate against the euro it’s pegged to, but Denmark’s central bank has been offsetting this by keeping interest rates lower than those set by the European Central Bank. This, however, has meant rising house prices.

A bigger issue is that Novo’s weight-loss drug lead is under pressure. This year the group cut its sales growth target twice, and on Wednesday the company said it would axe 12% of its global workforce – with 5,000 in its home market. Last month, Denmark slashed its 2025 GDP growth forecast from 3% to 1.4% citing U.S. tariffs, but also a shift in the Ozempic maker’s outlook. The concern is that Denmark suffers not just Dutch disease but Finnish fever – when Nokia lost its preeminent position in mobile phones in the 2000s, Finland had an insufficiently diversified economy to redeploy workers.

Still, Danes have other industries they can lean on. Although state-backed renewable energy company Orsted ORSTED.CO also has its issues, Denmark is home to companies like $33 billion shipping giant Maersk MAERSKb.CO, $17 billion Carlsberg CARLb.CO and Lego. And even 1.4% growth in 2025 would be in line with the average forecast for OECD countries.

Novo weakness, meanwhile, is not all bad for Danes. The stock market may also be less volatile if Novo, which currently accounts for a third of the $729 billion Danish exchange, falls in value. That would decrease the chance of a repeat of the past year, in which Novo’s 62% share slide has prompted Danish households to swallow losses on their savings worth 1 percentage point of GDP, according to Danske Bank. If Novo gets smaller, their wealth may be less vulnerable to wild swings – but the wider economy should still hold up.

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CONTEXT NEWS

Novo Nordisk, the maker of blockbuster weight-loss drug Wegovy, said on September 10 it will cut 9,000 jobs or 11.5% of its workforce in a restructuring to save $1.3 billion annually.

The overhaul will simplify the company, improve the speed of decision-making, and reallocate resources towards growth opportunities, the company said in a statement.

Novo, which currently has a global workforce of 78,400, said about 5,000 of the job cuts will be in its native Denmark. The move comes after it implemented a global hiring freeze in August for roles not critical to its business.

Denmark on August 29 cut its 2025 economic growth forecast to 1.4% from 3%, citing the impact of U.S. tariffs and weaker prospects of Novo Nordisk, the country’s largest pharmaceutical company.