Danish economy enters recession

Denmark entered recession in the first quarter, to the surprise of analysts, after its gross domestic product shrank for the second consecutive three-month period, official figures showed yesterday.

Statistics Denmark said the economy had slipped 0.5 per cent in the first quarter compared to the last quarter of 2010, according to seasonally adjusted figures.

The national statistics agency also revised its fourth quarter 2010 figure to a drop of 0.2 per cent, compared to its previous report the economy had declined 0.4 per cent during that quarter.

A nation is deemed to be in recession if the economy contracts for two consecutive quarters.

Denmark’s return to recession after more than a year in the clear surprised analysts who, according to a poll by Dow Jowns Newswires, had expected the Scandinavian country to post a 0.5 per cent hike in GDP in the first quarter.

Denmark suffered a deep recession during the global financial crisis, but was back in the green in the third quarter of 2009.

Contrary to the European Union as a whole and the United States, which posted growth in the first quarter, the Danish economy slumped back into the red as it was hit by falling consumption.

“There was a decline of 1.9 per cent in domestic demand, where private consumption, public spending and investments fell,” Statistics Denmark explained, pointing out that household consumption dropped 0.8 per cent while gross investments plummeted 8.3 per cent. The statistics agency added though that a boost in exports had countered the negative trend.

Year-on-year, Denmark’s economy meanwhile grew 1.1 per cent in the first quarter.