The national data agency, Statistics Denmark, estimated on Monday based on preliminary data that the economy shrank by 0.1 percent in the first three months of this year.

The measure of the economy comes from an indicator of the national GDP.

Statistics Denmark notes that the preliminary figures are subject to uncertainty, due in part to the Covid-19 pandemic.

Nevertheless, a measured reduction to GDP by 0.1 percent in the first quarter of 2022 is likely to be related to changes in the public sector and a downturn for household service industries, the agency writes.

A major factor in reduced public spending is the phasing-out of government-funded responses to the Covid-19 crisis, notably the national testing programme, an analyst suggested.

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“It’s primarily a fall in activity in the public sector that has driven a drop in GDP in the first quarter,” senior economist with the Danish Chamber of Commerce, Tore Stramer, told news wire Ritzau.

“The phasing-out of the test programme and similar activities from February onwards has simply lowered activity markedly in the health sector,” he said.

Despite the overall drop in GDP, sectors including industry, construction and business services had a strong quarter.

The results should also be seen in the context of a strong end to 2021 for the Danish economy.

A light downturn in recent months is not unexpected, said Morten Granzau of the Confederation of Danish Industry (Dansk Industri, DI).

“The trend will probably continue because of very high inflation along with the effects of the war in Ukraine and sanctions against Russia,” Granzau said.

“We are heading towards a new economic reality,” he said.

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