March 31, 2017 / 9:07 AM / 2 years ago

UPDATE 1-Danish economy seen expanding further after strong end to 2016

(Adds details, comments from economists)

By Teis Jensen

COPENHAGEN, March 31 (Reuters) - The Danish economy picked up pace at the end of last year, prompting several economists to raise their forecasts for 2017 with the proviso that labour shortages risked putting a brake on expansion.

The national statistics office on Friday adjusted fourth-quarter economic growth upwards to 2.3 percent year-on-year from an earlier reading of 1.9 percent, primarily due to stronger than expected exports. Denmark primarily exports food, pharmaceuticals and machinery.

The latest figures took growth for 2016 overall to 1.3 percent and make it feasible that Denmark’s gross domestic product could grow by two percent or more in the current year, Danske Bank’s chief economist Las Olsen wrote.

Sydbank may also revisit its 1.6 percent growth forecast, economist Soren Kristensen said.

“It definitely can’t be ruled out that we’ll see two percent growth again in 2017, which would be the first time since the financial crisis, and the highest growth in 11 years,” he said.

There is growing concern in Denmark however that the upswing could be dampened by a shortage of labour, particularly in the construction industry. The government has said it will address this issue with urgent reforms.

New unemployment figures on Friday indicated that a growing number of newly arrived immigrants had been deemed ready to join the workforce, which may help to ease the problem, Sydbank’s Kristensen said.

“Unfortunately, though, it is far from certain that it will make the bottlenecks disappear as it is not certain the new members of the work force have the skills the companies are looking for,” Kristensen added. (Reporting by Teis Jensen; Editing by Julie Astrid Thomsen/Keith Weir)

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