COPENHAGEN, Dec 8: The Danish government on Monday slashed its growth forecasts for 2008 and 2009, predicting that the economy would contract by 0.2 per cent in 2009 after growing 0.2 per cent this year.

“Financial turbulence and the weak international growth outlook will along with the wavering housing market and weakening competitiveness lead to weak GDP (gross domestic product) growth in coming years,” the Finance Ministry said in a statement.In October, the Danish government had already trimmed its growth forecast to between 0.75 and 1.0 per cent for this year from a previous estimate of 1.1 per cent growth, and to between 0.0 and 0.5 per cent in 2009 from a previous forecast of 0.5 per cent growth.

Denmark’s economy is not expected to grow before 2010, when its GDP should rise by 0.7 per cent, the Finance Ministry said on Monday.

The government also said it now expected Danish unemployment to double from this year’s 1.7 per cent to 3.5 per cent in 2010.

The country’s public sector surplus would meanwhile slip from 4.4 per cent last year to 3.0 per cent this year before transforming into a slight deficit in 2009. In 2010, the deficit would widen to 1.2 per cent, the ministry said.

Monday’s dire forecasts echoed analyst reports that Denmark, which earlier this year became the first European country to enter recession, would again see its economy contract after briefly flirting with growth in the second quarter.

“The Danish economy cannot avoid being affected by the global financial crisis and the poor outlook abroad. Our economic growth is now suffering too,” Finance Minister Lars Loekke Rasmussen said in the statement.

“But fortunately, our starting point is good, and much better than in many other countries,” he added.—AFP