The upturn in Denmark’s economy continued in the first quarter of 2018, where GDP expanded 0.4 percent. This is slightly higher than expected by the GDP indicator. The overall growth was mainly driven by consumption, both public and private. In particular private consumption showed great strength as it expanded 0.9 percent driven by a large increase in the purchase of cars. This is mainly because of the new and lower registration fees. Public consumption rose 0.2 percent.
Meanwhile, investment activity, which stagnated over the quarter, disappointed along with exports that dropped 0.5 percent. But as a result of the high activity in private consumption, imports rose 0.6 percent. Inventories were reduced, which in isolation reduced GDP growth by 0.3 percent.
On a year-on-year basis, Danish economic growth dropped 0.5 percent. This is mainly because of the fact that GDP growth in the first quarter was extraordinarily high because of a single export income from abroad for the use of a Danish patent.
“We believe that the continued strong labor market development, unemployment fell in April to 4 percent from 4.1 percent in March, coupled with rising house prices, will provide a solid foundation for private consumption development over the coming quarters. It is also expected that there will gradually be more investment activity as the economy is running out of resources”, stated Nordea Bank.
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