ECONOMIC HIGHLIGHTS - NOVEMBER/DECEMBER

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TAGS: ECON EWWT ETRD KTDB PGOV EAGR DA
SUBJECT: ECONOMIC HIGHLIGHTS - NOVEMBER/DECEMBER

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Contents:
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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
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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
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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
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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
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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

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requirements are expected to affect exports from the U.S., France,
Italy, Spain and Canada.

Danish Agriculture Debt Worries
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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
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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