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ECONOMY

Carmakers see weak sales as industrial orders stabilise

German luxury carmakers Audi, BMW and Daimler unveiled weak May sales figures on Monday as relatively good news was reported for German industry in general.

Carmakers see weak sales as industrial orders stabilise
Photo: DPA

BMW said sales of its brands, which include Mini and Rolls-Royce, shed 18.3 percent in May on a 12-month basis, a figure that was nonetheless better than April’s drop of 24 percent.

Daimler’s Mercedes-Benz division said May sales were off by 12.4 percent, but that was almost half the loss of nearly 24 percent reported in April. In Germany, which represents roughly one-quarter of all Mercedes sales, the group even saw an increase of 11 percent.

Audi limited its losses to 6.1 percent compared with May 2008, a statement said. Volkswagen’s high-end auto brand, therefore continued to fare better than its rivals, but the result was still a deterioration from its fall of 5.6 percent in April.

For the first five months of 2009, BMW delivered 487,906 vehicles, or 21.1 percent fewer than in the same period of 2008. “I am globally optimistic concerning an improvement in our sales throughout the year,” BMW sales director Ian Robertson said in a statement.

Mercedes-Benz sold 433,100 cars, which was also a drop of 21.1 percent.

Audi sold 374,350 cars, for a more modest decline of 12.1 percent.

At Mercedes, the launch of the E Class limousines has been a success, while sales of A and B Class cars have remained essentially stable on the year.

Meanwhile, the German Economy Ministry revised its figure for March industrial orders higher to a rise of 3.7 percent, the first increase in six months, and added that April orders had stayed at the same level.

The figures demonstrated a “noticeable improvement in the medium-term perspective” for German industries, according to a ministry statement.

Germany’s €2,500 ($3,500) car scrapping bonus has underpinned the sales of small cars in particular, with new car registrations jumping by 40 percent in May, according to data released by the auto federation VDA.

More powerful, expensive cars such as those sold by Audi, BMW and Mercedes have not really benefitted from the government’s plan however.

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ECONOMY

How is Denmark’s economy handling inflation and rate rises?

Denmark's economy is now expected to avoid a recession in the coming years, with fewer people losing their jobs than expected, despite high levels of inflation and rising interest rates, The Danish Economic Council has said in a new report.

How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year. 

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’,  Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.  

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn. 

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment? 

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024  about 1 percent below the estimated structural level. 

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending? 

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”.  The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”. 

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025. 

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023. 

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write. 

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers. 

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.” 

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