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Unexpected Fall In Danish Retail Sales

James Boston
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Unexpected Fall In Danish Retail Sales

Denmark has suffered an unexpected fall in it’s Retail Sales figures this morning according to the latest release by Statistics Denmark. The month on month reading for September dropped -0.9% compared to a rise of 0.6% in August, the expectation was for a further increase of around 0.4% in today’s data. Year on year growth is still evident but falling, the latest reading is showing at 0.5% compared to an August number of 1.1%, analysts had anticipated a 1.7% figure today.

A slowdown in domestic demand is seldom welcome in any economy, this is particularly true in the case of Denmark. Last month the government was forced to cut the official growth estimates for the year by almost half from 1.5% to just 0.8%, this forecast reduction came with the caveat that there was little room for further shocks to the economy. A moderate negative swing in Retail Sales should not normally be considered a shock, at least not in the classic economic sense of the term, but given the fragility being experienced by the Danish economy at the moment it certainly fits into the category of something that could trigger a further cut in growth projections.

It was only June when the government instigated the previous growth forecast which demonstrates how vulnerable the Danish economy is in it’s current condition. Second quarter GDP figures unexpectedly revealed a contraction of -0.3% in an economy that had been anticipating moderate, but positive, growth. Slowing exports have been cited as a primary cause of the economic softness, Denmark is particularly exposed to Russia and this is obviously being felt in the trade figures. The Danish Central Bank has little scope left to introduce further monetary easing, in order to maintain the DKK to EUR peg it has been keeping pace with the European Central Bank in terms of rate cuts. If the trend down in the economic indicators continues, even at a marginal pace, then there will likely be a further downward revision in the GDP forecast for the year.

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