Slowdown in consumption will hit Denmark hard


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Monday, 01 August 2011
The Danish economists are lining up to lament the newly released retail trade figures for June, where consumers once again showed restraint. The figures from Statistics Denmark showed a further drop in retail sales in June at 0.2 percent.

It comes on top of a surprisingly large drop from April to May of 1.1 percent. And economists now dread of how the Danish economy have to fight its way out of recession in the second quarter.
"It is crucial for the restoration of the Danish economy, such that domestic demand and private consumption starts to get started and helps to carry the torch. We are currently experiencing a slowdown in global growth in the wake of high oil prices, earthquake in Japan and the debt crisis in Europe and USA. We can therefore expect that foreign demand will decrease the time to come, so exports will draw a smaller share of the load, "writes economist in Danske Bank, Jens nerves Pedersen, in a comment.


At Handelsbanken senior economist Rasmus Gudum-Sessing´┐Ż believes that the retail numbers has not bided well for the economy. He points to a marked increase in goods inflation as an explanation, because it leaves less room for Danish consumption.

On the whole, there is basic growing savings desire for the economy this year as there is an additional headwind for consumers in terms of uncertainty about the development on a fragile housing market. Also there are the challenges for banks and mortgage companies and their prospects of low wage growth and fiscal tightening.

This is driven by the result of the recovery plan and general uncertainty about the future shape of economic policy ahead of parliamentary elections later to run the place in November.

Apart from a single month last year, June was the worst month for retailers in Denmark since 2004. The new figures from Statistics Denmark show that retail sales fell 0.2 percent compared to May, when one cleans the figures off inflation and seasonality.
By Team

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