Denmark: Danish economy rebounds in Q2
According to a preliminary estimate, the Danish economy returned to growth in the second quarter, with GDP posting a 0.6% quarter on quarter seasonally adjusted expansion, swinging from the prior three months’ upwardly revised 1.0% decline. The upturn fell short of market projections.
Meanwhile, year-on-year GDP growth accelerated to 2.5% in Q2 from Q1’s 1.9% increase, overshooting market expectations.
The quarterly upturn largely reflected an improvement in net exports. Exports of goods and services rebounded in Q2 and posted a 1.8% quarter-on-quarter seasonally adjusted expansion (Q1: -4.4% s.a. qoq); growth in exports of goods accelerated, and exports of services rebounded. Although imports of goods and services also returned to expansion (Q2: +0.2% s.a. qoq; Q1: -1.0% s.a. qoq), overall net trade had a positive impact on growth in Q2 after having subtracted from it in Q1.
Domestically, household consumption fell at a slightly softer pace in the second quarter (Q2: -0.3% s.a. qoq; Q1: -0.4% s.a. qoq). The result chiefly reflected a slight rebound in car purchases after they plunged in Q1. Meanwhile, public spending growth decelerated to 0.2% quarter on quarter, down from Q1’s 1.7% increase. Similarly, fixed investment growth waned to 0.5% in Q2 from the prior quarter’s 2.2% rise.
From a production point of view, the pharmaceutical industry was behind Q2’s improvement, with drugmakers’ production rebounding 8.5% over the quarter after having been the driver of Q1’s GDP decline.
Our Consensus is for GDP to post similar-sized sequential expansions to Q2 both in Q3 and Q4. The economy remains exposed to changes in the performance of the pharmaceutical industry, posing a significant two-sided risk to growth.
A second national accounts data release for Q2 will be published on 30 September.