Denmark: Economy contracts less than previously estimated in Q4
April 4, 2013
In the fourth quarter, GDP contracted 0.7% in seasonally adjusted terms over the previous quarter, according to revised estimates. The contraction marks an improvement over the initial estimate of a 0.9% contraction amid upward revisions to investment and government expenditure but contrasted the 0.8% expansion registered in the third quarter. On an annual basis, the economy contracted 0.6% in Q4 (previously reported: -1.0% year-on-year), down from the flat reading registered in the third quarter.
The contraction in Q4 came on the back of a drop in private consumption as well as a negative contribution from inventory changes. Private consumption dropped an unrevised 0.1% over the previous quarter, while government consumption expanded a revised 1.0%, up from the 0.3% expansion previously reported. Meanwhile, gross fixed investment increased 1.5% (previously reported: +0.3% quarter-on-quarter).
The external sector remained depressed as exports plunged. Exports of goods and services fell 2.1% in Q4 (previously reported: -1.6% yoy), while imports fell a softer 1.0% in the fourth quarter (previously reported: -0.9% qoq). Consequently, the external sector's net contribution to overall economic growth deteriorated slightly from minus 0.4 percentage points in the third quarter to minus 0.5 percentage points in the fourth.
In the full year 2012, GDP contracted 0.5%, which contrasted the 1.1% increase recorded in 2011. The government recently cut its economic growth forecast for this year from 1.2% to a range of between 0.5% and 1.0%, amid weaker demand prospects from the Eurozone. In addition, the Central Bank also lowered its growth forecast in its latest inflation report from March and now expects GDP to expand 0.8%, down from the previous 1.3% estimate. For 2014, the Banks expects GDP to expand 1.7%.
FocusEconomics Consensus Forecast panellists share the Bank's assessment and expect economic growth to reach 0.6% in 2013, which is down 0.3 percentage points from last month's forecasts. For 2014, panellists expect an expansion of 1.5%.