Denmark: GDP rebounds in the second quarter
A second national accounts release confirmed that economic activity rebounded in the second quarter, increasing 2.3% on a seasonally-adjusted quarter-on-quarter basis (previously reported: +2.2% s.a. qoq) and swinging from the 0.9% contraction recorded in Q1. On an annual basis, economic growth was stronger than initially estimated, with GDP expanding 8.5% in the quarter (previously reported: +8.2% yoy) and contrasting the previous period’s 0.7% decrease. Consequently, Danish GDP surpassed its pre-pandemic levels in Q2.
Domestically, the improvement was broad-based. Private consumption grew 4.3% on a seasonally-adjusted quarter-on-quarter basis in Q2, contrasting the 5.1% contraction logged in Q1. Households likely released some precautionary savings as Covid-19 restrictions were lifted throughout the quarter, and the unemployment rate decreased sharply (Q2: 4.8%; Q1: 6.1%). Moreover, government spending rebounded, growing 2.5% in Q2 (Q1: -1.8% s.a. qoq). Lastly, fixed investment also returned to growth, increasing 3.7% and contrasting the 3.8% decrease recorded in the prior quarter.
Meanwhile, the external sector dragged on overall growth in Q2. Exports of goods and services swung to a 2.5% contraction in the quarter (Q1: +3.8% s.a. qoq). Conversely, imports of goods and services bounced back, growing 0.2% (Q1: -4.0% s.a. qoq).
Moving forward, momentum will have likely spilled over into Q3, as authorities plan to fully reopen the economy in early September—despite an uptick in infection rates—as the vaccination campaign continues to swiftly progress. The unemployment rate continued to fall in July, while consumers became increasingly more optimistic in July–August, boding well for household consumption. Moreover, business sentiment was also upbeat in the same two-month period, likely supporting investment in the quarter.