Private consumption in Denmark likely slowed, but likely to contribute positively to growth in 2016

Denmark’s private consumption grew 2.1% in 2015. The growth was broad-based throughout consumption groups. Car consumption grew strongly by 6.8%, while car sales seem to have grown further in the early months of 2016. Car sales, in unit terms, are record high; however in DKK terms, car consumption is about 25% lower than the levels seen in 2007. Increasing real incomes mainly drove private consumption growth, while household debt dropped somewhat in 2015.

However, growth in consumption seems to have declined in late 2015 and in early months of 2016, according to Danske Bank. The decline in growth might be because of slowing housing market activity as low home sales indicate low consumption, added Danske Bank. Moreover, consumer confidence also declined in the past year, partially due to financial markets turmoil.

Nonetheless, consumer sentiment is high enough to show decent growth in consumption. The slowdown of economic activity during winter led to downward revision of consumer growth outlook for 2016, added Danske Bank. But solid growth in real income is expected to confirm consumption and positively contribute to overall economic growth in 2016, noted Danske Bank.