COPENHAGEN: The Danish economy shrank by 0.3 percent in the second quarter, official data showed yesterday, casting doubt on the government’s annual growth forecast as demand from European trading partners declined.
Analysts had expected economic output to grow slightly after consumer confidence this month reached levels not seen since 2007.
That was before Denmark was hit by a burst housing bubble, and after gross domestic product rose by 0.6 percent in the first quarter of this year.
The numbers reflected “a weak development of production within industry, mining and the service economy,” Statistics Denmark which published the figures, said.
Exports fell by 1.6 percent, “the sharpest rate of contraction in five years,” Capital Economics’ European economist Jessica Hinds wrote in a note to investors.
“This suggested that the weak demand from key trading partners in the euro-zone has weighed on exports,” she added.
Denmark is a member of the European Union, but not of the eurozone. Nordea chief economist Helge Pedersen said the Danish government would have to revise its annual growth projection downwards.
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