COPENHAGEN, July 1 (Reuters) - Denmark became the first European Union country to enter recession as it revealed a decline in gross domestic product for two consecutive quarters on Tuesday.
Its economy shrank 0.6 percent in the first quarter compared to the fourth quarter of 2007 with private and public consumption and investments all dragging GDP lower.
'The numbers are very disappointing and even more so because they stem from many different factors. It adds up to quite a poor picture,' said HSH Nordbank Senior analyst Erik Bennike.
The statistics office also revised its fourth quarter GDP number from a quarter-on-quarter rise of 0.3 percent to a fall of 0.2 percent.
'Denmark is in what is called a technical recession. The Danish economy has been hit harder than we have estimated,' said Danske Bank Chief Economist Steen Bocian.
He added the bank would revise its growth estimates.
Year-on-year, GDP fell 0.7 percent in the first quarter, but rose a revised 1.5 percent in the fourth quarter from 1.9 percent reported in April.
Economists had predicted year-on-year growth of 1.3 percent in the first quarter and quarter-on-quarter growth of 0.2 percent in a Reuters poll.
The statistics office said private consumption fell 1.1 percent in the first quarter compared to the fourth quarter mainly to a downturn in car sales of 4.4 percent.
GDP growth in Denmark slowed to 1.7 percent last year from 3.9 percent in 2006, according to new figures from the statistics office.
But while fears the economy will overheat have subsided as growth has slowed and housing prices have fallen, economists say Denmark still faces a shortage of labour, which may push wages and inflation higher into next year.
'We are worried that we have moved into a longer period of low growth. Rising unemployment and easing capacity pressures will mean that the discussion of overheating will no longer be on top of the agenda,' said Handelsbanken Chief economist Jes Asmussen.
After the data, Handelsbanken released new estimates, forecasting GDP growth of 0.6 percent this year and that the economy will shrink 0.25 percent in 2009.
This contrasts with government estimates of 1.2 percent growth in 2008 and 0.7 percent in 2009, released in late May. Keywords: DENMARK GDP/ tf.TFN-Europe_newsdesk@thomsonreuters.com slj COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
Its economy shrank 0.6 percent in the first quarter compared to the fourth quarter of 2007 with private and public consumption and investments all dragging GDP lower.
'The numbers are very disappointing and even more so because they stem from many different factors. It adds up to quite a poor picture,' said HSH Nordbank Senior analyst Erik Bennike.
The statistics office also revised its fourth quarter GDP number from a quarter-on-quarter rise of 0.3 percent to a fall of 0.2 percent.
'Denmark is in what is called a technical recession. The Danish economy has been hit harder than we have estimated,' said Danske Bank Chief Economist Steen Bocian.
He added the bank would revise its growth estimates.
Year-on-year, GDP fell 0.7 percent in the first quarter, but rose a revised 1.5 percent in the fourth quarter from 1.9 percent reported in April.
Economists had predicted year-on-year growth of 1.3 percent in the first quarter and quarter-on-quarter growth of 0.2 percent in a Reuters poll.
The statistics office said private consumption fell 1.1 percent in the first quarter compared to the fourth quarter mainly to a downturn in car sales of 4.4 percent.
GDP growth in Denmark slowed to 1.7 percent last year from 3.9 percent in 2006, according to new figures from the statistics office.
But while fears the economy will overheat have subsided as growth has slowed and housing prices have fallen, economists say Denmark still faces a shortage of labour, which may push wages and inflation higher into next year.
'We are worried that we have moved into a longer period of low growth. Rising unemployment and easing capacity pressures will mean that the discussion of overheating will no longer be on top of the agenda,' said Handelsbanken Chief economist Jes Asmussen.
After the data, Handelsbanken released new estimates, forecasting GDP growth of 0.6 percent this year and that the economy will shrink 0.25 percent in 2009.
This contrasts with government estimates of 1.2 percent growth in 2008 and 0.7 percent in 2009, released in late May. Keywords: DENMARK GDP/ tf.TFN-Europe_newsdesk@thomsonreuters.com slj COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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