Danish economy grows strongly in Q2 on higher consumption, net exports

Denmark’s economy grew strongly in the second quarter of this year, mainly driven by higher consumption and net export.

Danish GDP grew a robust 0.5 percent in sequential terms in the second quarter. Increased consumption in government and consumers, and net export mostly drove the growth. The Danish economy is expected to continue on a higher growth path in the future, noted Nordea Bank in a research note.

Net exports in Denmark grew 0.8 percent quarter-on-quarter in the second quarter. Services exports, which grew 1.7 percent, mainly drove the higher increase in overall exports. On the other hand goods exports were up 0.3 percent. Meanwhile, imports declined 0.7 percent in the second quarter, thereby resulting in net exports contributing significantly to the overall economic growth in the quarter.

Household consumption has been growing 2 percent and is at present one of the main drivers of the economic growth. Fixed investment, on the other hand, dropped 0.9 percent. The decline was mainly due to reduced activity in the construction sector. Inventories were a drag on the second quarter growth and subtracted 0.7 percentage points from the growth.

Denmark’s economy is expected to remain on a higher growth path. The projection growth is likely to be boosted by increased private consumption, which would be driven by a positive real wage growth, low interest rate level, rising employment and higher house prices.

“In total we expect Danish GDP to increase by around 1 percent in 2016 due to this year’s low starting point. In 2017 we expect growth to reach around 1.5 percent”, noted Nordea Bank.