Denmark Economic Forecast

Denmark Economic Outlook

November 21, 2017

Recent data shows that industrial output rebounded in annual terms in September, following two months of contractions. Exports accelerated in the month, growing at a double-digit annual pace. While upturns in the industrial, external and retail sectors at the end of Q3 are likely to have translated into higher growth, Q3 growth is unlikely to have bounced back to the level seen in Q1 following a marked slowdown in Q2. Survey data from October suggests upbeat economic prospects in the final quarter. Consumer confidence remained strong, and business confidence moved into optimistic territory. A booming housing market, propped up by decade-long negative interest rates enacted by an ultra-loose monetary policy, and healthy real wage growth have kept the domestic economy sturdy. On 13 November, the government and rival parties agreed to simplify the country’s tax system in a bid to boost investment. The measures are expected to be fully implemented by 2022.

Denmark Economic Growth

Growth is expected to moderate next year as the government pursues a tighter fiscal policy stance. The move to limit stimulus comes amid risks of overheating as the housing market continues to expand unabated. It remains to be seen whether overheating will be curbed by the recently introduced changes to lending criteria. Moreover, a stronger krone stemming from an appreciating euro—as the Central Bank maintains a fixed exchange rate policy vis-à-vis the euro—is expected to weigh on export competitiveness. Met the why particular panelists expect GDP to expand 2.0% in 2018, up 0.1 percentage points from last month’s estimate. For 2019, the panel projects growth of 1.9%.

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Denmark Facts

Bond Yield0.38-1.54 %Dec 06
Exchange Rate6.31-0.57 %Dec 06
Stock Market997-0.39 %Dec 06

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