Denmark: Growth inches up in Q1 but domestic demand disappoints
May 31, 2017
Denmark’s economy started the year at a broadly steady pace, growing a seasonally-adjusted 0.6% in Q1 over the previous quarter, according to preliminary data released by Statistics Denmark (DST). The reading came in above the 0.5% expansion in Q4 as a pickup in government consumption and an expansion in inventories supported the overall rise. In annual terms, GDP rose 3.1%, marking a solid acceleration from the 2.3% increase seen in Q4 and the best performance in over six years.
Private consumption was subdued in Q1 and grew a timid 0.3% (Q4: +1.4% quarter-on-quarter), likely reflecting the climbing unemployment rate and higher inflation dragging on households’ budgets. Moreover, fixed investment fell 2.7%, the worst result since Q4 2009, though base effects were the main reason for the tumble after large investments in ship building were undertaken in late 2016.
On the external side of the economy, exports of goods and services fell 0.9%, which contrasted the 4.3% increase seen in Q4, with lower prices for crude oil dragging on shipments abroad. Imports of goods and services decreased 1.6%, contrasting the 3.2% expansion in Q4, mainly due to base effects after a strong fourth quarter.
Denmark’s economy will accelerate this year largely driven by the improved momentum in the Eurozone and increased global trade volumes, though domestic demand is set to reduce moderately.