Denmark: GDP growth steps on the gas in Q4
A revised national accounts data release for the fourth quarter of 2023 showed GDP growth accelerated to 2.6% on a seasonally adjusted quarter-on-quarter basis, up from both the 0.4% increase recorded in the third quarter and the preliminary estimate of a 2.0% rise. Q4’s reading marked a two-and-a-half-year high.
Similarly, on an annual basis, economic growth sped up to 3.5% in Q4, improving from both the previous period’s 0.6% expansion and the preliminary estimate of a 3.1% increase. Q4’s reading marked the fastest expansion since Q1 2022. Consequently, 2023 GDP growth was upwardly revised by 0.1 percentage points to 1.9% (2022: +2.7%).
Domestically, the quarterly improvement reflected household spending growth hitting an over two-year high of 2.0% in the final quarter of 2023 (Q3: +0.1% s.a. qoq). While employment levels were unchanged, purchasing power recovered as nominal wage growth notably outpaced the inflation rate in Q4, supporting consumption. Meanwhile, public spending flatlined in Q4, improving from the 0.4% decline in Q3. Less positively, fixed investment swung to contraction, falling 6.8% in Q4, contrasting the 3.1% expansion recorded in the previous quarter.
On the external front, exports of goods and services growth accelerated to 7.5% in Q4 (Q3: +5.4% s.a. qoq). Conversely, imports of goods and services growth waned to 2.5% in Q4 (Q3: +7.1% s.a. qoq).
In Q1, sequential GDP growth will decelerate notably from Q4, largely reflecting a high base of comparison. Afterward, growth will gain steam through Q4. Overall, in 2024, the economy should expand at a roughly similar pace to that of 2023, to a great extent supported by a notably stronger domestic demand amid lower inflation and interest rates later in the year.