Denmark’s economy expanded more than estimated in the second quarter, emerging from a recession, as exports rose after the euro area returned to growth.
Gross domestic product rose 0.5 percent from the first three months of 2013, Copenhagen-based Statistics Denmark said today. GDP was seen growing 0.2 percent in a Bloomberg survey of five economists. The economy expanded an annual 0.4 percent. First-quarter GDP shrank a revised 0.2 percent, versus unchanged earlier, after a 0.7 percent contraction in the fourth quarter.
Denmark this week lowered its growth forecasts while predicting wider deficits. Finance Minister Bjarne Corydon said that the government will need to keep welfare spending in check even as the AAA nation has lowered taxes and announced investment measures to support an expansion.
“The numbers were a surprise and the biggest one was how much exports climbed,” said Steen Bocian, chief economist at Copenhagen-based Danske Bank A/S. “The euro area coming out of recession this quarter played a big part while the developed markets improving globally also helps.”
The country is struggling to emerge from a burst property bubble in 2008 that triggered a banking crisis and wiped out more than a dozen lenders. The $320 billion economy, home to A.P. Moeller-Maersk A/S, has also been buffeted by the debt crisis in the euro area, which emerged from its longest recession in the second quarter.
Denmark cut its economic forecast for growth to 0.2 percent in 2013 from a 0.5 percent estimate. Government spending, which accounts for 19 percent of the total output in the second quarter, rose 0.7 percent, after slipping a revised 2.8 percent in the first three months, the statistics office said today. Private spending was unchanged while exports gained 1.8 percent.
Economists at Nordea Bank AB, Jyske Bank AB and Sydbank A/S said growth would have been stronger had it not been for a four-week lockout of teachers that forced thousands of working parents to stay at home in the last quarter
“The reasons growth surprises today are improvements in Danish competitiveness and in overseas economies,” Peter Bojsen Jakobsen, an economist at Sydbank, said in a note. “Today’s numbers seem rock solid. Still, private consumption is stalling.”
Investors exiting the euro area last year bought up Danish bonds, rewarding the government for keeping its debt load at less than half the euro-zone average. The yield on Denmark’s benchmark 10-year bond traded at about 2.05 percent today, compared with 1.85 percent on similar-maturity German bonds, according to data compiled by Bloomberg.
The difference in yield between 10-year danish debt and similar maturity German bonds grew to its widest in at least a year, and traded at 20 basis points as of 2:35 p.m. in Copenhagen, according to data compiled by Bloomberg.
“The momentum in the Danish economy is pointing to better days and growth rates improving,” Helge Pedersen, a Copenhagen-based chief economist at Nordea Bank AB, said in an interview yesterday. “Though it won’t really show until later in the year and into 2014.”