Denmark: Second estimate confirms growth moderated in Q1 2019
The economy grew a downwardly revised 0.2% in seasonally-adjusted quarterly terms in the first quarter of 2019 (previously reported: +0.3% quarter-on-quarter), according to the latest national accounts data which were released by Statistics Denmark on 29 May. This was a marked deceleration from Q4’s upwardly revised 0.9% growth (previously reported: +0.8% qoqsa), which was primarily driven by a weaker external sector. In annual terms, GDP growth fell to 2.2% in Q1, down from the 2.6% registered in the quarter prior.
The domestic economy posted a solid performance. Household consumption growth was stable in the first quarter (Q1: +0.4% qoqsa; Q4: +0.4% qoqsa), driven by a surge in vehicle purchases. Moreover, gross fixed capital formation rebounded in Q1, logging 1.8% growth (Q4: -1.0% qoqsa). Public consumption, however, contracted 0.2% (Q4: +0.5%).
The external sector abated as growth of exports of goods and services slowed to 0.5% in Q1, down from the 1.1% logged in the previous quarter. Moreover, imports of goods and services grew 3.7% in the first quarter, contrasting the 0.9% decline recorded in the fourth quarter of last year. Overall, the external sector nicked 1.4 percentage points off the overall GDP headline figure.
Despite the soft Q1 outturn, the economy is expected to gather momentum over 2019 as a whole compared to 2018. A healthy labor market and solid wage gains should keep consumer spending upbeat, while exports are expected to strengthen after 2018’s lackluster performance. Nevertheless, risks remain skewed to the downside. Particularly, a slowdown in the Eurozone and uncertainty over Brexit could weigh on external demand and dampen business confidence, which would hurt growth in the export-oriented sectors as well as investment prospects more generally.