• Data released today showed that the Danish economy grew by 0.5% q/q in Q3 – which was surprisingly good and above our forecast.

  • Exports and private consumption disappointed, falling by 0.2% and 0.6%, respectively, from Q2 and Q3. In contrast, fixed gross investment rose an impressive 1.2%.

  • Contributions to growth from the various subcomponents add up to a negative growth figure of -0.16%. Hence, statistical uncertainty contributes a very considerable 0.64 percentage points to the overall growth figure. In other words, Denmark has just experienced high but inexplicable growth.

  • According to our current growth profile, today’s figures would put growth at 0.8% this year and 1.5% next year.

Today’s GDP figures showed that the Danish economy grew by 0.5% from Q2 to Q3, after making seasonal and inflation adjustments. Exports and private consumption fell by 0.2% and 0.8%, respectively, from Q2 to Q3, while fixed gross investment rose by 1.2%. Public consumption rose 0.1%. While growth is positive news for the Danish economy, our examination of the figures in more detail reveals a fly in the ointment.

Looking at the contributions to growth, exports were a drag of -1.0 percentage points, which when summed with the movement in imports means net exports made no overall contribution – neither positive nor negative – to growth in Q3. Nor did public consumption contribute. Turning to investment, which as already mentioned rose at an impressive rate, it made a 0.2 percentage point contribution to growth. Collating all the subcomponents of the demand and output data, the overall result is that GDP growth was actually negative (-0.16%) in Q3. Hence, statistical uncertainty explains a very considerable 0.64 percentage points of the growth figure. In other words, Denmark’s strong job growth for Q3 14 looks inexplicable and the GDP data look better on the surface than when we dig into the details. This needs not be a major problem, as the national accounts data are rather complicated. Nevertheless, it means that we are unable to explain what is behind the surprisingly strong GDP growth.

The number of people in employment was broadly unchanged, down by 500. However, employment numbers for the previous quarters were adjusted down, so job growth is not as strong as previously thought. Employment grew by 13,000 from Q4 last year to Q3 this year and a total of 22,400 new jobs have been created since the beginning of 2013.

Given today’s data and our current growth profile, Denmark is set for GDP growth of 0.8% this year and 1.5% next year. Thus, 2014 looks likely to be the first year since 2011 with positive GDP growth in Denmark.

This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.

Recommended Content


Recommended Content

Editors’ Picks

USD/JPY pops and drops on BoJ's expected hold

USD/JPY pops and drops on BoJ's expected hold

USD/JPY reverses a knee-jerk spike to 142.80 and returns to the red below 142.50 after the Bank of Japan announced on Friday that it maintained the short-term rate target in the range of 0.15%-0.25%, as widely expected. Governor Ueda's press conference is next in focus.  

USD/JPY News
AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD attacks 0.6800 in Friday's Asian trading, extending its gradual retreat after the PBOC unexpectedly left mortgage lending rates unchanged in September. A cautious market mood also adds to the weight on the Aussie. Fedspeak eyed. 

AUD/USD News
Gold consolidates near record high, bullish potential seems intact

Gold consolidates near record high, bullish potential seems intact

Gold price regained positive traction on Thursday and rallied back closer to the all-time peak touched the previous day in reaction to the Federal Reserve's decision to start the policy easing cycle with an oversized rate cut.

Gold News
Ethereum rallies over 6% following decision to split Pectra upgrade into two phases

Ethereum rallies over 6% following decision to split Pectra upgrade into two phases

In its Consensus Layer Call on Thursday, Ethereum developers decided to split the upcoming Pectra upgrade into two batches. The decision follows concerns about potential risks in shipping the previously approved series of Ethereum improvement proposals.

Read more
Bank of Japan set to keep rates on hold after July’s hike shocked markets

Bank of Japan set to keep rates on hold after July’s hike shocked markets

The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session. 

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures