Danish FinMin says no guarantee recession risk over

Reuters

By Teis Jensen and Erik Matzen

COPENHAGEN (Reuters) - It is too early to call an end to the crisis and the Danish economy could succumb to renewed weakness despite a recent improvement in economic indicators, the finance minister told Reuters.

Bjarne Corydon said on Friday he does not believe Denmark is through the time when there is a risk of falling back into recession, which would be the country's fourth since the beginning of the crisis.

"I think you have to be very cautious giving such guarantees," Corydon told Reuters.

"We are moving in the right direction but we should not believe that we have necessarily seen the last disappointment or negative surprise when it comes to economic indicators," he said.

Since 2008 Denmark has three times experienced a contraction in two consecutive quarters, which is the standard definition of a recession.

The country has struggled to boost consumer confidence since a property bubble burst, leaving many people wary of spending. The global financial crisis has also dampened exports, another main driver of the economy.

The Danish government has downgraded its forecast for economic growth in 2013 four times in the latest 13 months and now expects the Danish economy to grow by a modest 0.2 percent this year. It believes growth will pick up next year to 1.6 pct.

Revised figures from the national statistics office released on Monday showed the economy expanded 0.6 percent in the April-to-June period compared to the same time in 2012.

Private consumption accounts for about half of the Danish economy and since June the Danish consumer confidence index has been in positive territory, indicating that consumers for the first time since the crisis have a more positive view on their economic future.

Bjarne Corydon, whose centre-left government came into power in October 2011, said that several economic indicators have improved and he believes it indicates a mood change in the Danish economy.

"If you look at all the factors I think it is fair to say that there has been a fundamental change compared to what we have worked with since this government came in to power".

The finance minister on Friday started political negotiations to win parliamentary support for his minority government's budget proposal for 2014.

"The formula for our economic policy is to make it as accommodative as possible within responsible limits," Corydon said. (Editing by Christina Fincher)

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