Danish Consumer Prices Dip In August

Sep 10, 2007 - The Danish Consumer Price Index or CPI dipped 0.2% month-on-month in August, the statistical office said Monday. On a yearly basis, the index moved up 1.1% in August.

The Net price index also dropped 0.2% monthly and rose 1.2% annually in August.

The harmonized CPI slid 0.2% over the month, while it rose 0.9% year-on-year.

Denmark cuts 2007 GDP, jobless rate forecasts

Aug 27, 2007 - Denmark's Finance Ministry cut its forecast for economic growth this year to 2.0 percent from a prediction in May of 2.2 percent, according to a copy of the 2008 draft budget obtained by Reuters on Monday.

According to the draft, the 2008 forecast for gross domestic product growth was raised to 1.3 percent from 1.2 percent.

The government is due to publish the draft budget on Tuesday at 0800 GMT.

Denmark's GDP rose 2.3 percent year-on-year in the first quarter of 2007, according to data from the National Statistic Office published last month. GDP grew 3.5 percent last year.

The Danish economy has been running strongly in the last few years, with red-hot job and housing markets stoking consumption.

But GDP, consumer confidence and housing price data this year have indicated that the economy has shifted to a lower gear and many economists now predict a soft landing and slower growth ahead.

In a comment in the draft, Finance Minister Thor Pedersen said that with high employment, large public budget and current account surpluses, and low inflation, the Danish economy was strong not only historically but relative to that of other countries.

"The current large surpluses will become smaller in the years to come because there will be fewer Danes working and more elderly Danes and tax revenue from the North Sea will fall," he said.

The 2007 public budget surplus was seen at 66.2 billion Danish crowns ($12.15 billion) or 3.9 percent of GDP, down from 71.0 billion forecast in May. The 2008 surplus is estimated at 55.3 billion crowns against 59.3 billion previously.

NORTH SEA OIL

Denmark, a European Union member but euro zone outsider, has had a government budget surplus since 1997, while public debt has declined considerably. This is mainly the result of larger tax revenues from earnings of funded pension schemes and rising North Sea oil and gas revenue.

The unemployment rate, already at more than 30-year lows of 3.5 percent of the work force in June, is seen falling to 3.3 percent on average this year and 3.1 percent next year.

Last week, Denmark's centre-right government unveiled 10 billion crowns of tax cuts for the employed starting next year to capitalise on a strong economy and help set the stage for a possible early election later this year.

In the draft, the Finance Ministry said that public consumption was estimated to rise 1.8 percent this year against the May prediction of 1.3 percent. Public consumption next year is seen rising 1.7 percent compared with 1.1 percent seen in May.

Danish Q1 GDP up 0.5 pct vs Q4, ahead of consensus

Jun 12, 2007 - Denmark's seasonally adjusted GDP grew 0.5 pct in the first quarter of 2007 compared to the fourth quarter of 2006, Statistics Denmark reported.

Market expectations were for GDP growth of 0.2 pct, according to a survey of analysts from RB Boersen.

Compared to the first quarter a year earlier, GDP grew by 1.8 pct, said Statistics Denmark.

Danish Economic Council cuts GDP growth forecasts on fall in private consumption

May 31, 2007 - The Danish Economic Council said it has cut its GDP growth forecasts for 2007-2009 because of a fall in private consumption.

It said private consumption fell in 2006 and indicators show this has continued into 2007.

However, the council expects private consumption to show rising growth from next year as a result of the greater wealth resulting from the strong rise in house prices over recent years.

It put 2006 private consumption growth at 3.4 pct, compared with its estimate of 4.5 pct in its last report in December.

Private consumption growth in 2007 is now forecast at 1.8 pct, down from the council's previous forecast of 3.1 pct. In 2008, private consumption growth is expected at 2.4 pct, the same as in the previous forecast, and at 2.5 pct in 2009, compared with 2.3 pct previously.

The council now sees GDP growing by 1.8 pct in 2007 and by 1.4 pct in both 2008 and 2009. The previous forecasts saw GDP growing by 2.1 pct, 1.6 pct and 1.6 pct respectively.

At the same time, the council adjusted its unemployment, inflation and balance of payment forecasts.

The council now sees the number of unemployed at 106,000 in 2007, rising to 110,000 in 2008 and 114,000 in 2009, but these estimates are lower than the previous forecasts of 114,000, 117,000 and 119,000 respectively.

It said the unemployment figure of 110,000 at the end of 2006 is about 30,000 below the structural level. Demand for labour will remain at a relatively high level in the coming years, but with a slight rising trend.

Inflation in 2007 is now seen at 2.0 pct, up from 1.8 pct in the previous forecast and driven by rising domestic costs derived from increased growth in pay. In 2008 inflation will be 2.0 pct, the council said, down from its previous forecast of 2.1 pct. For 2009, the forecast remains unchanged at 2.2 pct.

The balance of payments surplus will fall more sharply in the coming years than previously forecast, with imports rising faster than exports to meet strong domestic demand, the Economic Council said.

It now sees the surplus at 30 bln dkr in 2007, a rise from the previous forecast of 28 bln dkr. But the surplus will fall to 23 bln dkr in 2008 and to 10 bln dkr in 2009, from forecasts of 26 bln dkr for both years previously.

The Economic Council sees the Danish economy at close to its capacity limit and this, together with weaker growth in the major export markets, means a weaker development in exports.

The possibility for increasing production through increased employment - through lower unemployment or a larger workforce - is limited without new initiatives in labour and tax policies or an increased influx of foreign workers, the council said.

A greater-than-expected increase in demand for labour implies a real risk of pay rises that are higher than the council's current forecasts. This will weaken the country's competitive abilities as productivity is not rising at the same rate. The council said there is therefore a risk that the present boom will be followed by a longer period with low growth and rising unemployment.

The Economic Council added that Denmark's demographic development in the coming years will put pressure on the public finances and, in combination with a comparatively low development in productivity, will lead to economic growth that is considerably lower than in peer countries.

The council said a new, medium-term plan for Denmark's economy towards 2020 should contain targets both for growth in the labour force and for tax and public spending policies. This plan should also contain benchmarks for public expenditure, including service costs and transfer incomes, as a share of GDP, rather than the current, narrower definition for managing public spending.