VZCZCXRO6732
RR RUEHIK
DE RUEHCP #0444/01 2821306
ZNR UUUUU ZZH
R 091306Z OCT 09
FM AMEMBASSY COPENHAGEN
TO RUEHC/SECSTATE WASHDC 5229
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 COPENHAGEN 000444 
 
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 EFIN ENRG ETRD EWWT KTDB PGOV DA
 
SUBJECT: DENMARK SEPTEMBER ECONOMIC HIGHLIGHTS 
 
COPENHAGEN 00000444  001.2 OF 002 
 
 
CONTENTS 
-------- 
ECON: Denmark GDP Down Sharply in Q2 
ECON: Productivity Concerns Persist 
EFIN: Interest Rate Spread Back to Pre-Crisis Levels 
EWWT: Maersk Confident Despite Financial Crisis 
ENRG: GE Wind Looking to Expand in Northern Europe 
 
Denmark GDP Down Sharply in Q2 
----------------------------- 
¶1. Danish GDP contracted by 2.6% in the second quarter of 2009, due 
primarily to massive declines in investment of 10.3% and net trade, 
with imports down 3.9% and exports down 4.5%.  Private consumption 
also showed a minor decline of 0.3%.  Government consumption was up 
by 0.5%, but was insufficient to counter the combined downturn in 
other GDP components.  Compared to the same period in 2008, 2009 Q2 
GDP was down by 7.2%.  GDP contracted by 5.3% in the first half of 
2009 compared to the first half of 2008.  The new figures have 
shocked local analysts, who have revised downward their expectations 
for the Danish economy and are now projecting a total contraction 
for 2009 GDP of 4.5% - 5% (previous projections were 3.5% - 4%). 
Retail sales were down in August by 1.2% compared to July, and down 
4.6% compared to August 2008.  The value of transactions using the 
Dankort, the cash card used as a primary means of payment and often 
taken as an indicator for trends in private consumption, was 6.3% 
less in August than in July, making for a grim month for the 
hoped-for consumer driven recovery.  Extrapolating from the OECD's 
most recent July statistics, we estimate the current unemployment 
rate basically unchanged at around 6.4%. 
 
Productivity Concerns Persist 
----------------------------- 
¶2.  According to an OECD report, Denmark is expected to have the 
fourth slowest GDP growth among OECD countries between 2008 and 
2017, primarily due to lagging productivity growth.  The Danish 
government released a discussion paper estimating Denmark will lose 
DKK 20 billion (USD 3.95 billion and over 1% of GDP) annually in 
potential GDP growth due to lower than projected productivity 
growth.  As a response, the government has launched the Growth 
Forum, comprising CEOs from Denmark's biggest companies, ministers, 
scientists, labor market representatives and economists, to find 
solutions to improve productivity growth.  With current GDP figures 
worse than expected and private consumption not showing signs of a 
pickup, Danish businesses and the opposition are increasing their 
calls for additional stimuli in next year's public budget.  However, 
the government remains reluctant to launch additional stimulus 
initiatives at this point. 
 
Interest Rate Spread Back to Pre-Crisis Levels 
--------------------------------------------- - 
¶3.  The Danish National Bank lowered its leading lending rate, 
effective September 25, to 1.25%, thereby returning to the 
pre-crisis spread of 0.25% to the ECB lending rate.  The spread rose 
to 1.75% in defense of the Kroner last autumn.  On September 29 the 
main deposit rates were lowered as well -- the Current Account rate 
to 0.9% from 1.0% and the certificates of deposit rate to 1.0% from 
1.15%.  Local commentators believe the Bank will not lower the 
lending rate any further unless the ECB moves first, which would be 
unexpected. 
 
Maersk Confident Despite Financial Crisis 
----------------------------------------- 
¶4.  Maersk Line presented 2009 first half losses big enough to pull 
the entire Maersk Group into the red, the first time that has 
happened in their 105 year history.  However, Maersk Group CEO Nils 
Smedegaard Andersen is attempting to project confidence and claiming 
the firm has the situation under control.  Maersk Line underwent 
massive restructuring over the last couple of years, starting prior 
to the crisis, and the cost cutting and efficiency improvements are 
now paying off.  Prior to the crisis, Maersk Line was earning USD 
200 less per container than its competitors, but with the 
restructuring they are now making USD 100 more.  Andersen projects 
the freight market will be in imbalance for the next couple of 
years, but that Maersk Group will come through the crisis 
strengthened as it is already gaining market share on its supply 
services and terminal businesses. 
 
GE Wind Looking to Expand in Northern Europe 
-------------------------------------------- 
¶5.  With the shutting down of ship building at the Lindo shipyard, 
it appears the facility is likely to become a center for off-shore 
wind turbines.  GE Wind and Siemens Wind Power are both reported to 
be interested in establishing separate operations for production and 
shipping of off-shore wind turbines for the Northern European market 
at the former shipyard.  American GE Wind recently entered the 
off-shore market by purchasing a small Norwegian producer.  They 
 
COPENHAGEN 00000444  002.2 OF 002 
 
 
have expressed that they want their share of the European market and 
intend to build facilities on the European continent. 
 
FULTON