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UPDATE 2-Danish Q2 GDP slides worse than expected 7.2 pct

Published 09/30/2009, 06:31 AM
EUR/DKK
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DANSKE
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* Q2 GDP drops 7.2 pct yr/yr vs Rtrs poll forecast -5.3 pct

* Adjusted Q2 GDP falls 2.6 pct q/q vs -0.8 pct forecast

* Q1 GDP revised to -3.4 pct y/yr from previous -4.1 pct

* Economists say they will lower their 2009 GDP forecasts

(Adds details, quotes throughout)

By John Acher and Peter Levring

COPENHAGEN, Sept 30 (Reuters) - The Danish economy slid much deeper into recession than economists expected in the second quarter, shrinking 7.2 percent year-on-year, official data showed on Wednesday.

Some economists called it a record plunge, though Statistics Denmark would only confirm it was the steepest fall since 1991 when comparable quarterly data began to be compiled.

Denmark's foreign trade-dependent economy has been hit hard by the global economic downturn, suffering its deepest recession in more than four decades.

The drop, Denmark's fourth consecutive quarter of negative growth, exceeded eight economists' median expectation of a 5.3 percent drop in a Reuters survey.

"It looks really, really bad," Danske Bank chief economist Steen Bocian told Reuters.

"Today's figures show that Denmark has been hit considerably harder by the global economic and financial crises than we had feared," Bocian added in a note to clients.

He said the weak second-quarter data pointed to a full-year 2009 GDP drop of 4.5 to 5 percent and that Danske Bank was likely to cut its forecast next week.

Handelsbanken Capital Markets chief economist Jes Asmussen said: "While several of our big trading partners technically left recession behind them in the second quarter, that was certainly not the case for the Danish economy."

2009 CONSENSUS CHALLENGED

Jyske Bank senior economist Niels Ronholdt said: "Consensus on Danish GDP in 2009 has been for a drop of between 3 and 3.5 percent, but from these numbers it looks more like a drop of 5 percent."

In mid-September, the Danish central bank revised its forecast for 2009 GDP to negative 3.2 percent from a previous negative 2.5 percent, but it forecast a recovery to 0.9 percent GDP growth in 2010.

Seasonally-adjusted GDP dropped 2.6 percent in the second quarter from the first quarter, against economists' median estimate of a 0.8 percent drop in the Reuters survey.

"The drop is much bigger (quarter-on-quarter) than we had expected, almost an entire percentage point," Bocian said.

Investments dropped sharply in the second quarter, private consumption fell, and the downturn in foreign trade persisted with a marked decline in both imports and exports, Statistics Denmark said .

Second-quarter fixed investment dropped 10.3 percent quarter-on-quarter and 16.3 percent year-on-year. Exports were down 13.6 percent from a year ago and down 4.5 from the first quarter.

The second-quarter data came later than usual due to companies' deferred value-added tax reporting.

First-quarter GDP was revised to a contraction of 3.4 percent from a drop of 4.1 percent reported in June.

The value of Danish GDP in the second quarter fell to 408.3 billion Danish crowns ($79.90 billion).

The Danish crown softened to 7.4440 to the euro from 7.4432 before the data were released but retraced to 7.4436 by 0930 GMT.

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