Denmark’s economy in 'technical recession' after new GDP slump
A combination of price increases, reduced purchasing power, high interest rates and global economic certainty have been blamed for derailing Denmark’s economy, which is now in a technical recession according to preliminary figures.
Denmark’s GDP shrunk in two consecutive quarters, meaning the economy is now technically in recession according to a preliminary indicator from Statistics Denmark.
That comes despite inflation having dropped to almost zero last month.
The GDP indicator, which carries a 0.5 percent uncertainty factor, shows a 0.3 percent decline in Denmark’s GDP for the third quarter of 2023, the same factor by which the economy shrank in Q2.
Should the preliminary number prove accurate, the economy is in a “crystal clear technical recession”, senior economist Tore Stramer from the Danish Chamber of Commerce said in a written comment.
Another analysts, Arbejdernes Landsbank senior economist Jeppe Juul Borre, said the economy remains under pressure on several fronts.
In a written comment, Borre pointed at high interest rates and poor consumer purchasing power as the main culprits.
Despite the figures indicating a technical recession, alarm bells need not be rung yet, he said.
“It doesn’t say much about how hard the recession is and the economy has only shrunk by a small amount. At the same time, it gives a picture taken from the GDP figures in isolation. Other branches of the economy are actually showing honourable traits, so today’s official technical recession is not as bad as it might sound,” he said.
READ ALSO: Inflation in Denmark 'almost at zero' in new figures
A period of falling economic activity can however be expected according to Stramer.
“Having said that, we don’t expect an extended period of falling activity in the Danish economy. It remains our expectation that, towards spring and summer 2024, we will see a return to positive growth in the Danish economy,” he said.
Economy Minister Troels Lund Poulsen noted that Denmark’s economy is affected by international factors.
“Our view remains that the Danish economy has good prospects for a soft landing and that we will see new growth in the economy in line with households regaining their purchasing power,” Poulsen said in a written comment.
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Denmark’s GDP shrunk in two consecutive quarters, meaning the economy is now technically in recession according to a preliminary indicator from Statistics Denmark.
That comes despite inflation having dropped to almost zero last month.
The GDP indicator, which carries a 0.5 percent uncertainty factor, shows a 0.3 percent decline in Denmark’s GDP for the third quarter of 2023, the same factor by which the economy shrank in Q2.
Should the preliminary number prove accurate, the economy is in a “crystal clear technical recession”, senior economist Tore Stramer from the Danish Chamber of Commerce said in a written comment.
Another analysts, Arbejdernes Landsbank senior economist Jeppe Juul Borre, said the economy remains under pressure on several fronts.
In a written comment, Borre pointed at high interest rates and poor consumer purchasing power as the main culprits.
Despite the figures indicating a technical recession, alarm bells need not be rung yet, he said.
“It doesn’t say much about how hard the recession is and the economy has only shrunk by a small amount. At the same time, it gives a picture taken from the GDP figures in isolation. Other branches of the economy are actually showing honourable traits, so today’s official technical recession is not as bad as it might sound,” he said.
READ ALSO: Inflation in Denmark 'almost at zero' in new figures
A period of falling economic activity can however be expected according to Stramer.
“Having said that, we don’t expect an extended period of falling activity in the Danish economy. It remains our expectation that, towards spring and summer 2024, we will see a return to positive growth in the Danish economy,” he said.
Economy Minister Troels Lund Poulsen noted that Denmark’s economy is affected by international factors.
“Our view remains that the Danish economy has good prospects for a soft landing and that we will see new growth in the economy in line with households regaining their purchasing power,” Poulsen said in a written comment.
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