* Govt, C.bank both see economy shrinking by 0.4 pct in 2012
* Growth in 2013 will be slower than earlier expected
* Budget deficit seen above forecasts in 2013
COPENHAGEN, Dec 13 Denmark's government and
central bank slashed their economic growth forecasts on
Thursday, warning that the road to recovery would be longer and
more difficult than previously predicted.
Denmark's triple A-rated economy will contract this year,
below earlier expectations for modest growth and only expand
slowly in 2013, both institutions said in regular reviews.
Euro zone outsider Denmark has struggled to stay out of
recession this year and narrowly escaped again in the third
quarter as the economy's main growth drivers lost steam.
"Growth in the Danish economy has declined in 2012 and, by
all indications, has practically ground to a halt at the
moment," Central Bank Governor Nils Bernstein said. "Danish
consumers and firms continue to be hesitant ... (and) export
market growth has been decreasing this year."
For 2012, both the centre-left government and the
Nationalbank see a contraction of 0.4 percent while for 2013,
the government sees growth at 1.2 percent and the bank at 1.3
Private consumption, one of the economy's main growth
drivers, has been anaemic despite record-low interest rates,
partly as a consequence of a burst property bubble that left
many households indebted and wary of spending.
Faltering exports have also contributed to slower growth,
and private consumption has been too weak to take up the slack.
"2012 will neither be the year we thought it would be, or
hoped for, it has unfortunately turned out to take longer for
the Danish economy to recover," Economics and Interior minister
Margrethe Vestager said.
The government also forecast a bigger budget deficit for
next year, revising its estimated to 2.5 percent of GDP from 1.9
For this year though, it lowered the deficit estimate to 3.9
percent of GDP from 4.0 percent seen in August.