Danish economy continues to grow in 2019, growth likely to decelerate in 2020 on slowdown in global economy

Danish economy grew 0.3 percent quarter-on-quarter in the fourth quarter of 2019, according to the flash indicator. This suggests that the GDP grew 2.1 percent in the whole of 2019, making it the sixth straight year with growth above the long-term potential rate.

Statistics Denmark showed that the growth within the service industry contributed the most to the overall GDP growth in the fourth quarter. This higher supply in the service industry is underpinned by a strong rise in household disposable income due to growing employment, positive real wage growth and much lower interest expenses.

On the contrary, manufacturing production decelerated in the fourth quarter. This deceleration in goods production is also seen in some of the leading monthly indicators as both manufacturing production and turnover in export of goods have stagnated in recent months. This comes as a natural consequence of the overall fall in the global GDP growth, even if the Danish economy has actually been very good at withstanding the lower global demand through a very solid growth within the pharmaceutical industry in recent years.

“Looking forward we expect Danish GDP to expand by 1.5 percent this year. The slightly lower growth rate compared to previous years will mainly be caused by the slowdown in the global economy, which means that the stagnation in exports and manufacturing production that occurred in Q4 2019 most likely will continue into the first part of this year. On the other hand the ample buffers in the household sector and no major imbalances form a solid base for a higher demand in the domestic economy. In that sense what happened in Q4 2019 could very likely be mirrored in the Danish economy this year”, said Nordea Bank in a research report.