Danish economy sputters, govt sees 2013 recovery

December 21, 2011

RECORDER REPORT

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Denmark cut its growth forecasts and raised its deficit estimates on Tuesday from projections made just a month ago, reflecting growing pressure on an economy that analysts believe has slipped back into recession. Citing the impact of the global downturn and the eurozone debt crisis, the centre-left government trimmed its growth forecast to 1.0 percent next year and predicted only a slight pick-up of 1.4 percent growth in 2013.

Economists said even that recovery was optimistic for the Nordic region's worst-performing economy, hit by weak export markets, anaemic domestic demand and poor consumer confidence stemming from a property price plunge after a boom. A plan, announced by the government when it took office in October, to bring forward public investments to kick-start growth and disburse money from an early pension scheme would give stimulus next year but the forecast pick-up in activity in 2013 was too rosy, they said. "While we share the government's growth estimate in the short term, the government is in our view too optimistic on the Danish economy's growth potential in 2013," Danske Bank chief economist Steen Bocian said in a note to clients.