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Fast Comment DenmarkSomewhat slower economic expansion

  1. Preliminary GDP indicator showed growth of 0.3 percent q-o-q in Q1
  2. Slightly stronger than our expectations of +0.1 percent q-o-q
  3. However, it is still a more subdued growth rate than we have become used to over recent years
Subdued economic expansion
The preliminary GDP indicator showed growth of 0.3 percent q-o-q in the first quarter. That was a bit stronger than our expectations (+0.1 percent q-o-q). However, it is still a somewhat slower expansion than we have become used to over recent years. Thus, it appears that the Danish economy showed the same tendency toward slowdown seen in most parts of the developed world in Q1.
Cold weather and industry contribute
There are no details of the demand components available yet, but it appears that construction and industry contributed positively to growth. Furthermore, the cold weather in Q1 also seems to have lifted energy consumption, and thus contributed to private consumption growth, despite otherwise subdued signals for household expenditure. On the other hand, exports most likely acted as a drag on economic activity, not least due to a drop in sea transportation, which means that the transport sector most likely saw negative development.
We expect moderate growth ahead
Since its introduction, the GDP indicator has not been a very reliable signal of the final growth result, and we expect the more detailed GDP figures to show an even more subdued economic expansion in Q1. Thus, we expect a relatively weak beginning to the year, which of course, will also affect overall growth for 2018. We still expect the economy to continue to grow for the remainder of the year, but we expect growth to be moderate. We stick to our forecast of 1.3 percent GDP growth in 2018. However, our estimate is influenced by the very large one-off payment for the use of a Danish patent in Q1 last year, which if unrevised, will dampen GDP growth this year by 0.4 percentage points. You can read more about that in our latest Global Macro Forecast report, which was published April 24.


Jes Asmussen

Chief Economist Denmark

Denmark and The Netherlands

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