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Weak Danish exports constrict the economy and push it more to recession

Wednesday, 09 November 2011
The Danish economy has really been performing poorly in the past six years, as the Danish companies exported less to the international market.

As events in the Euro-zone play some part as well as the slow down in demands in other leading market such as the USA and Canada, the past Danish government has been blamed for the negative relationship building with other emerging markets which have not been affected by European events.

Denmark has not been able to capture more market outside the Euro region and the North Americans such as emerging economies – many which have been shredded from the euro crisis.
New figures from Statistics Denmark show that exports fell by 1.8 percent in September and that it has fallen by 1.2 percent if one look at the period from April to September.

The development is worrying, and according to both Danish and Nykredit Bank there is increased risk that Denmark could fall again into a recession. This will happen if Denmark for several quarters fails to see growth in its gross domestic product. Popularly speaking, one can say that the economy is shrinking.

Decline in exports suggests that the major export engine that would otherwise have driven growth through the current recovery period is about to lose power.
“That, combined with consumer spending which is still declining, and that business investment is almost flat, meaning that overall, we expect negative growth in the third quarter and there will also be a real possibility that the fourth quarter will also offer negative growth. It will send the Danish economy in a new technical recession,” says senior economist at Nykredit, Tore tensioner.

The outlook does not show an improved economic situation in Europe, a region where Denmark does more business.  Danske Bank has recently lowered its expectations for the growth of the euro countries growth in 2012 from 1.1 percent to 0.3 percent.

“As the European market is clearly our biggest export market, there is reason to fear that exports are very difficult to pull Danish economy over the coming years,” said Steen Bocian, chief economist of the Danske Bank.

It is especially Danish exports of machinery and transport equipment, which fell in the third quarter. There has been a decline in sales of generators and wind turbine component to the U.S. and Canada and this has added more to the gloom.
By Scancomark.se Team

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