The Factors that are Hurting the Danish Economy
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The Danish economy has experienced various blows over the recent years, although not entirely from the same place. Over the last three years, the purchases that Danish locals have been making abroad using electronic transactions has seen an increase of approximately 40%, despite having only experienced a 14% national increase.
The Danish economy has experienced various blows over the recent years, although not entirely from the same place. Over the last three years, the purchases that Danish locals have been making abroad using electronic transactions has seen an increase of approximately 40%, despite having only experienced a 14% national increase.
According to recent studies by the Danish central bank (Nationalbanken), every 100 kroner that is spent using payment cards within the country, amounts to approximately 11 kroner in spending boosts abroad. Analysts suggest that the change in spending and purchasing habits within the country has been so significant that it has had a serious effect upon the Danish economy. According to an analyst from Nykredit bank, if the purchases that were being made abroad had taken place within Denmark itself, the private consumption sector would have seen an increase of almost 6.7 billion kroner from 2011.
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The Online Shopping Boom
According to analysts, the development within the Danish economy is due to an increased popularity of shopping online and creating border trades. By trading and shopping elsewhere, residents of Denmark have been able to obtain the goods that they need at a cost far cheaper than what would be offered in the country. As a result, every fourth purchase made in Denmark is from a business abroad.
Denmark provides consumers with some of the highest prices in the European Union when it comes to consumer products, 6% higher than the averages within Belgium, France, Finland, Italy, Germany, and the Netherlands. It also does not help that this country has a socialized health care system that weighs down on the spending power of all its citizens.
In 2013, the Danes spent approximately 17 billion kroner on goods from foreign online shops – approximately double the amount that was spent in 2012. For the first time, the amount spent online was in excess of the amount spent at border shops, which came to approximately 12 billion kroner last year. With the number of Danish online shoppers reaching such staggering heights, it seems as though the trend will only continue for the following few years, leading to results that hamper the economy of the country.
What the Danes are Purchasing
Surveys have shown that some of the most common products that Danish locals purchase from abroad through online retailers include:
* Sporting goods
* Clothing
* Music
* Films and TV series
* Electronics
Evidently, online shops provide a much greater selection, combined with a far lower price range.
The Germany Effect
Of course, it’s not only online shopping that is having a negative effect on the Danish economy. Orders from companies in Germany were reduced by approximately 6% in August this year, suffering the steepest fall since 2009’s financial crisis.
Economists suggest that there is a strong correlation between orders from German companies and Danish exports, meaning that the further Germany’s numbers fall, the further Danish exports will decline. With weak growth in the German economy, interest rates have been cut to all-time lows, and this is one of the main reasons why Danish interest rates are also at record lows.
