Danish economy contracts more than expected

30 Nov 17

The Danish economy has shrunk more than expected, suggesting the worst contraction since 2011, according to data released today.

The gross domestic product fell to -0.6% on a quarter on quarter basis, marking the first quarterly contracting since the end of 2015, Statistics Denmark said.

The statistics followed OECD’s forecast this month, which projected the growth for the Scandinavian country to return to a pace of 2% in 2018 and 2019, after reaching 2.2% in 2017.

In its latest Economic Outlook, the OECD said the global economic performance is still weaker than a decade ago and “remains below the pre-crisis period”.

Although the numbers were “a step in the wrong direction”, they are “not yet grounds for concern”, Sydbank economist Soren Kristensen was quoted in saying by Bloomberg.

Chief economist at Danske Bank Las Olsen also said in a note: “We expect a strong rebound in the fourth quarter, but it will probably be hard to reach 2% growth for the year, with things as they are now.”

The drop in the Danish GDP reversed the second quarter’s growth to 0.6%, down from 0.7%. The first quarter of this year saw an expansion of 0.7%. Exports fell 1% in the quarter, while private consumption declined 0.6%, led by a drop in vehicle purchases as many awaited the outcome of lawmaker talks on cutting car taxes.

On a year on year basis, the GDP grew just 1.3%, down from 2.5% in the second quarter. Eurostat yesterday warned of the risk of the data being worse than expected, predicting a smaller contraction of 0.3%.

The statistics office, however, said that its flash estimates are liable to revision and can have a range of uncertainty of +0.5 percentage points.

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