VZCZCXRO4021
RR RUEHIK
DE RUEHCP #0577/01 3571248
ZNR UUUUU ZZH
R 231248Z DEC 09
FM AMEMBASSY COPENHAGEN
TO RUEHC/SECSTATE WASHDC 5375
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 COPENHAGEN 000577 
 
SIPDIS 
 
STATE FOR EEB/IFD/OMA, EEB/TPP/ABT, EUR/NB 
TREASURY FOR DAVID WRIGHT 
COMMERCE FOR PAUL DACHER 
 
E.O. 12958: N/A 
TAGS: ECON EWWT ETRD KTDB PGOV EAGR DA
SUBJECT: ECONOMIC HIGHLIGHTS - NOVEMBER/DECEMBER 
 
COPENHAGEN 00000577  001.2 OF 002 
 
 
Contents: 
--------- 
ECON: Denmark shows GDP Growth in third quarter 
ECON: 2010 Public Budget Agreement 
EWWT: Maersk Group Wants Strong Legislation on CO2 Emissions 
ETRD: Danish Pork Exports to China will be tested for H1N1 
EAGR: Danish Agriculture Debt Worries 
ECON: Denmark by Numbers 
 
Denmark shows GDP Growth in third quarter 
----------------------------------------- 
¶1. Statistics Denmark released the 2009 Q3 GDP figures on December 
¶22.  In a highly unexpected result, the figures showed GDP growth of 
0.6% in the third quarter, the first growth since the first quarter 
of 2008.  Denmark's GDP as of the end of August was at approximately 
the same level as 2004 Q4.  Comparing year-on-year figures, 2009 Q3 
GDP was 5.2% less than in 2008 Q3.  The Danish GDP growth of 0.6% is 
higher than the EU average third quarter growth of 0.4% growth. 
Most local commentators were expecting a contraction of 0.2% or zero 
growth.  Both private and public consumption were up, as were 
imports and exports, but investment fell.  Statistics Denmark is 
currently delaying reporting GDP figures by one month due to the 
postponement of VAT and payroll tax payments. 
 
2010 Public Budget Agreement 
---------------------------- 
¶2.  The Government and the Danish People's Party (which supports the 
governing Liberal/Conservative coalition, but is not a member of the 
coalition) finalized negotiations for the 2010 public budget on 
November 12.  Next year's budget will include a DKK 5 billion (USD 1 
billion) stimulus package for infrastructure, hospital, and school 
construction, as well as public building renovations to increase 
energy efficiency.  The stimulus spending is targeted for 2010 until 
¶2013.  The Government is also making DKK 3 billion (USD 600 million) 
available to Danish municipalities to borrow for planned 
investments.  The postponement of payroll tax payments by one month 
will be extended until the end of 2010, in effect extending DKK 20 
billion (USD 4 billion) worth of credit to businesses.  The agreed 
budget also included additional funds for elder care, funds for the 
police and intelligence services in support of COP15, along with new 
initiatives aimed at combating youth- and gang-related crime.  The 
Government is projecting a budget deficit of DKK 77.25 billion (USD 
15.32 billion) in 2010, about 5% of GDP. 
 
Maersk Group Wants Strong Legislation on CO2 Emissions 
--------------------------------------------- --------- 
¶3.  Maersk Group CEO Nils Smedegaard Andersen announced that Maersk 
Group is supporting tough regulation of emissions from freight 
shipping and called for a high and stable price on carbon emitted by 
ship traffic.  The Group would specifically like to see a duty on 
the usage of bunker fuel.  Maersk Group sees an increased focus on 
the environment as a massive boost to the company's competitiveness, 
provided there is global application of environmental regulations. 
The company has already developed several 
energy-efficiency-improving technologies at its Lindo shipyard. 
These technologies have so far not been profitable to deploy, but 
could become so if the price imposed on carbon emissions from 
shipping were high enough.  Maersk Group and the Danish Shipowners' 
Association have been pressing for a global agreement on carbon 
emissions through the International Maritime Organization for some 
time, and are hopeful that UN climate negotiations will eventually 
lead to a political agreement on this front.  The sentiment that CO2 
emissions should have a price is spreading through Danish businesses 
with similar statements from the CEOs of DONG Energy (the largest 
utility company), Vestas Wind Systems, Novo Nordisk and others. 
 
Danish Pork Exports to China will be tested for H1N1 
--------------------------------------------- ------- 
¶4.  The Chinese government announced a demand for tests of all 
imported pork for the H1N1 virus, which came into effect in 
mid-November.  The Chinese have announced they will test all 
products themselves if the demand is not followed; any positive 
result for the virus will lead to an import ban for all pork 
originating in the same country as the infected pork.  Denmark 
exported DKK 500 million (USD 100 million) worth of pork to China 
last year and the market is growing.  The EU has so far not wanted 
to comply with the demand as it goes against WHO recommendations. 
According to the Danish National Board of Health, the virus cannot 
be contracted through the consumption of pork, and the virus dies 
within three days on metallic surfaces and therefore would not 
survive transport to China.  Denmark has agreed to test all pork 
exports to China for the H1N1 virus and disinfect the freight 
containers before transport.  The EU expects China to use the H1N1 
test requirement as a technical barrier to trade, as the Chinese 
Ministry of Agriculture released a regulation in January 2009 
describing how the reduction of pork imports could be used to 
stabilize the price of pork on the Chinese market.  The test 
 
COPENHAGEN 00000577  002.2 OF 002 
 
 
requirements are expected to affect exports from the U.S., France, 
Italy, Spain and Canada. 
 
Danish Agriculture Debt Worries 
------------------------------- 
¶5.  Denmark's 13,000 professional farmers have a collective debt of 
about DKK 350 billion (USD 70 billion), or DKK 27 million (USD 5.4 
million), per farmer as of the end of 2009.  The combination of low 
prices and high debt has the chief economist of the Danish 
Agriculture and Food Council speculating that 25% of the farmers 
will go bankrupt within five years.  A soon-to-be-released report 
from the Council finds that the average net loss in 2009 will be DKK 
328,000 (USD 65,600) for grain farmers, DKK 312,000 (USD 62,400) for 
cattle farmers and DKK 744,000 (USD 148,800) for pork producers.  A 
new report from the EU Commission finds that of all EU states' 
agriculture, Denmark's is the most dependent on direct EU subsidies, 
which account for 62% of the sector's Gross Factor Income (GFI). 
The report's authors pointed to the 7.7% drop in 2008 revenue and 
the high indebtedness of Danish farmers as an explanation for the 
high share of subsidies. 
 
Denmark by the Numbers 
---------------------- 
¶6.  Private sector wages have increased by 2.4% through October 2009 
(down from a year-on-year increase of 4.3% in early 2009).  The 
Economic Council estimates that the average wage increase in 
Denmark's most important export markets will be 1.8% in 2009 and 
1.5% in 2010, thereby hurting Danish competitiveness and 
accentuating the harmful effects of the strong Kroner. 
Extrapolating from the most recent OECD statistics, we estimate 
total seasonally adjusted Danish unemployment by end of November at 
7.2%.  The composite indicator for consumer confidence fell to -3.6 
in December from -2.4 in November, putting confidence at the lowest 
level since June.  An improvement to -1.4 had been expected. 
Consumers assess their own and Denmark's economic situation as worse 
today than one year ago.  Their projection of the economic situation 
in Denmark one year from now has become gloomier for three months in 
a row. 
 
FULTON