Denmark: GDP accelerates in Q1 but domestic demand remains weak
June 30, 2017
Revised data confirmed that Denmark’s economy started the year on a slightly stronger note than it finished the previous year: GDP grew 0.6% in Q1 over the previous quarter when adjusted for price and seasonality, marginally above Q4’s 0.5% growth. Q1’s reading is the highest in six months and came on the back of an upswing in government consumption. In annual terms, GDP rose 3.6%, up from 2.9% in the previous quarter, and marks the best result in over 10 years.
On the domestic side of the economy, public consumption recorded a rebound in the first quarter, increasing from Q4’s 0.5% contraction to a 0.8% expansion in Q1. Private consumption, however, decelerated: it grew 0.7% compared to Q4’s 1.4%, a rather weak performance. Meanwhile, fixed investment contracted 2.0% in Q1, contrasting Q4’s 1.1% increase, and recorded the worst reading in more than seven years. Lower investments in machinery and equipment offset a strong increase in residential investments, as the real estate market booms.
On the external side of the economy, both exports and imports of goods and services had a significantly weak first quarter. Exports of goods and services dropped minus 0.9%, the largest contraction in more than four years and contrasting Q4’s revised 4.4% expansion (previously reported: +4.1% qoq). Imports also deteriorated markedly from Q4’s 3.6% expansion (previously reported: +3.7% qoq) to a 1.8% fall in Q1, which marks the worst result in more than seven years.
Author: Jan Lammersen, Economist