Despite unexpected growth for the third quarter, the economy remains in a serious recession

Third quarter figures for the Danish economy were slightly better than expected, much to the surprise of most analysts.

Statistics Denmark posted the figures on Tuesday, which showed a 0.6 percent growth in the GDP compared to the second quarter. And the figure is a huge step in the right direction compared to those posted for the same period in 2008, where the GDP fell by a whopping 5.2 percent.

Most analysts had nonetheless predicted another drop in economic growth for the 2009 third quarter.

‘Growth across Europe was at about 0.4 percent for the quarter, while it was only 0.2 percent in Sweden, so we’re very surprised – and happy – about the news,’ Steen Bocian, Danske Bank’s chief economist, told financial daily Børsen.

But Denmark is still in an extremely difficult economic situation, analysts pointed out, especially in light of the second quarter figures. GDP fell by 7.2 percent in that period compared to the year before and by 2.6 percent from the first quarter of the year – the worst figures since the oil crisis of the 1970s.

Analysts also say that the recovery period for this crisis has been painfully slow compared to other recessions. A GDP drop of around 5 percent is still expected for the year, although many economists believe growth of around 1.5 percent is likely for 2010.

But the weak turnaround will lead to a continued rise in unemployment, according to experts. Danske Bank expects the unemployment rate to continue increasing until at least the start of 2011, where an estimated 160,000 people will be officially registered as unemployed. Unemployment currently sits at around 103,000 people.

On the positive side, the bank indicated the housing market had reached its low point and prices will again begin to stabilise.