Denmark: Economy contracts in Q4
February 28, 2013
In the fourth quarter, GDP contracted 0.9% in seasonally adjusted terms over the previous quarter according to preliminary estimates, contrasting the 0.8% expansion seen in the third quarter. On an annual basis, the economy contracted 1.0% in Q4, down from the flat reading registered in the third quarter. Revised data will be published on 4 April.
The contraction in Q4 came on the back of a drop in private consumption as well as a negative contribution from inventory changes. Private consumption dropped 0.1%, following the 0.2% contraction recorded in the previous quarter, while government consumption softened to a 0.3% increase over the previous quarter, down from the 1.0% expansion recorded in Q3. In addition, gross fixed investment slowed to a 0.3% increase over the previous quarter from the 0.8% expansion observed in the July-September period.
The external sector remained depressed as exports plunged. Exports of goods and services fell 1.6% in Q4, exceeding the 0.8% drop recorded in Q3, while imports fell a softer 0.9% in the fourth quarter (Q3: -0.1% quarter-on-quarter). Consequently, the external sector's net contribution to overall economic growth only improved slightly from minus 0.4 percentage points in the third quarter to minus 0.3 percentage points in the fourth.
In the full year 2012, GDP contracted 0.6%, which contrasted the 1.1% increase recorded in 2011. The government expects the economy to expand 1.2% this year and 1.6% in 2014. Meanwhile, the Central Bank expects growth to reach 1.3% this year before accelerating to a 1.8% expansion in 2014. FocusEconomics Consensus Forecast panellists are less optimistic and expect economic growth to reach 0.8% in 2013, which is down 0.1 percentage points from last month's forecasts. For 2014, panellists expect an expansion of 1.5%.