Denmark: GDP growth exceeds market expectations
August 30, 2013
GDP expanded at a seasonally adjusted rate of 0.5% over the first quarter in Q2 according to preliminary estimates. The reading contrasted the 0.2% contraction seen in the previous quarter and was well above the 0.2% increase expected by the markets. More detailed data will be published on 30 September.
The improvement in the second quarter was broad-based and primarily reflected the rebound in domestic demand (Q1: -3.5% quarter-on-quarter; Q2: 1.3% qoq). Total consumption also expanded in the second quarter by 0.2% qoq, contrasting the 1.1% decrease seen in the previous quarter. This increase came on the back of a rebound in government consumption (+0.7% qoq), whereas private consumption showed flat growth. Meanwhile, fixed investment rebounded to a 0.9% expansion (Q1: -1.2% qoq).
On the external side of the economy, exports of goods and services increased by 1.8% in Q2 marking the highest level in more than two years. On the other hand, imports increased just 0.1% (Q1: +1.7% qoq). Consequently, the external sector's net contribution to overall economic growth improved from minus 0.7 percentage points in the first quarter to plus 0.8 percentage points in the second.
The government expects the economy to expand 1.2% this year and 1.6% in 2014. Meanwhile, the Central Bank expects growth to reach 0.5% this year before accelerating to a 1.7% expansion in 2014. FocusEconomics Consensus Forecast panellists are less optimistic and expect economic growth to reach 0.2% in 2013, which is down 0.1 percentage points from last month's forecasts. For 2014, panellists expect an expansion of 1.4%.
Author: Dirina Mançellari, Senior Economist