COPENHAGEN (Reuters) - Denmark broke out of recession in the first quarter, beating economists’ expectations for a contraction and underlining a brighter outlook for even the worst performing of the Nordic economies compared to the neighbouring euro zone.
Denmark’s seasonally-adjusted gross domestic product (GDP) grew 0.3 percent in the first quarter of 2012 from the previous quarter, Statistics Denmark said.
Economists surveyed by Reuters had expected a 0.1 percent quarter-on-quarter decline, according to the median estimate, in what would have been the third quarter running of contraction.
“Today’s figures come as a nice surprise as, on the basis of a number of disappointing indicators, we had feared that the recession would extend into the first quarter,” Danske Bank economist Jens Naervig Pedersen said in a note to clients.
Sweden and Norway - who both grew around 1 percent in the first quarter - are among the strongest economies in Europe, helped by a combination of better ordered banking and public finances and, in Norway’s case, oil and gas revenues.
Denmark in comparison has trailed behind, partly due to the effects of a burst property bubble that has left households indebted and stunted private consumption, undermining recovery from the biggest downturn since World War Two.
First-quarter GDP increased just 0.2 percent from the same quarter a year earlier, Statistics Denmark said, matching economists’ median expectation. Aggregate domestic demand rose by 1.2 percent, the agency added.
Nordea global chief economist Helge Pedersen said the performance was still not robust, with exports growing just 0.3 percent on the quarter.
“It is worrying that exports, which have so far been the driver of the economy, now seem to be facing difficult times in light of the weak development in Europe,” Pedersen said.
“All in all, the numbers indicate that the Danish economy will continue to need a vitamin injection in the form of easing monetary and fiscal policy,” Pedersen said.
The Danish central bank has cut interest rates to record lows and many economists say it has more room to move given the strength of the crown currency - on which rate moves have tended to focus - against a weakened euro.
Neighbouring Sweden’s strong public finances have allowed it avoid the sort of austerity which has crippled growth across the euro zone, and Denmark’s government has already announced plans to bring forward 10 billion crowns in investment this year.
“We (the Nordics) are capable of easing fiscal policies whereas most of Europe is doing the opposite,” said Nykredit Markets senior economist Tore Stramer.
Thursday’s numbers also confirmed the economy grew 1.0 percent in 2011 overall and the government has forecast an expansion 1.1 percent this year and 1.5 percent in 2013.
Further details in Danish available on the Danish National Statistics Office’s website www.dst.dk. ($1 = 5.9964 Danish crowns)
Additional reporting by Mette Fraende and Ole Mikkelsen; editing by Patrick Graham