Gross domestic product dropped 1.8% from the previous three months, the largest fall in almost four years, Statistics Denmark said on Tuesday in a preliminary reading. A decline in industry and transport drove the contraction, the agency said.

The data underscores how reliant Denmark has become on its drugmakers, including Novo Nordisk A/S, for economic growth, with quarterly swings in shipments affecting the national economy. Just last week, the Danish government raised its 2024 growth forecast, citing Novo and other pharmaceutical firms as key accelerators, expected to bolster exports as well as investments within construction and machinery.

However, those growth prospects have not yet materialized, with pharmaceutical production falling 12.2% over the quarter, according to data from earlier this month, though economists say this is likely to be temporary. Tore Stramer, chief economist at the Danish Chamber of Commerce, said on Tuesday that first-quarter GDP was impacted by a decline in pharmaceutical production from “an extraordinarily high level” and is “probably of both a technical and practical nature.” 

“This should not be seen as an expression that a wider slowdown has hit the Danish economy,” Stramer said. “If we look ahead, there are certainly no signs that we are facing a turnaround in production within the pharmaceutical sector; on the contrary, the arrow points strongly upwards.”

Danish first-quarter GDP was also impacted by a drop in cars sales and service exports driven by rising rising freight rates in sea transport, Statistics Denmark said.