Denmark: Growth steadies in Q2 but domestic demand disappoints again
August 31, 2017
The Danish economy clocked another solid performance in the second quarter of this year, growing at the same quarter-on-quarter pace of 0.6% seen in the first quarter. The reading was supported by a rebound in fixed investment, which was enough to offset a slowdown in government consumption growth and flat private consumption. In annual terms, however, GDP growth slowed to 2.7% from the previous quarter’s 3.5%.
Private consumption was flat quarter-on-quarter in Q2 (Q1: +0.8% quarter-on-quarter). A rebound in retail sales, likely supported by declining unemployment and falling inflation, did not spur consumer spending. Fixed investment recorded a 1.7% increase in Q2, in contrast to Q1’s 2.1% contraction, on the back of large ship investments. Government consumption, however, halved from Q1’s 0.8% growth to a 0.4% increase in Q2.
The external sector performed fairly poorly in the second quarter. Although exports expanded 0.8% in quarterly terms (Q1: -0.9% qoq), imports increased a faster 1.8% qoq (Q1: -1.6% qoq). As a result, the net contribution of the external sector was negative in Q2.
Enhanced momentum in the Eurozone and increased global trade volumes will likely boost growth in the Danish economy, though domestic demand is set to remain sluggish.
Author: Jan Lammersen, Economist