Denmark GDP Q1 2021

Denmark

Denmark: GDP falls back to contraction in Q1

May 31, 2021

Economic activity swung back into contraction in the first quarter of 2021, with GDP declining 1.3% in seasonally-adjusted quarter-on-quarter terms, slightly above the preliminary estimate of a 1.5% drop but contrasting the 0.8% expansion recorded in Q4 2020. On an annual basis, economic activity fell at a more moderate pace than the initial estimate of a 1.7% contraction, recording a 1.3% decline in Q1 following the previous quarter’s 1.5% drop.

Domestically, private consumption declined 4.9% in Q1, swinging from the prior quarter’s 1.0% expansion, as consumers scaled back spending due to renewed restrictions to curb the spread of the Covid-19 virus. Moreover, the slightly higher unemployment rate in the quarter (Q1: 6.1%; Q4 2020: 5.9%) likely weighed further on private spending. Meanwhile, government spending logged a 2.2% drop in the quarter, contrasting Q4 2020’s 5.2% growth. Lastly, gross fixed capital formation recorded a mild 0.5% fall, following the previous quarter’s 1.2% increase.

On the external front, exports of goods and services gained notable traction in Q1, recording a 6.1% expansion, up from Q4’s flat reading. Meanwhile, growth in imports of goods and services slowed to 1.6% in Q1 from Q4 2020’s 2.3%.

Looking ahead, economic activity is seen rebounding to a strong expansion in Q2 and gaining further traction in Q3, following the lifting of virtually all domestic restrictions in mid-May amid an accelerating vaccine rollout. Continued low lending rates, coupled with improving sentiment among consumers and businesses, will bolster household spending and investment, further strengthening activity.

FocusEconomics Consensus Forecast panelists see the economy expanding 3.1% in 2021, which is up 0.1 percentage points from the previous month’s forecast, and growing 3.2% in 2022.


Author:, Junior Economist

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Denmark GDP Q1  2021 0

Note: Quarter-on quarter changes of seasonally-adjusted GDP and year-on-year variation in %.
Source: Statistics Denmark (DST) and FocusEconomics Consensus Forecast.


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