Denmark Economic Forecast

Denmark Economic Outlook

January 30, 2018

Recent data for the final quarter points to a lackluster close to 2017 following the worst quarter-on-quarter GDP growth performance since Q3 2011 in the third quarter. Industrial production contracted in October and November, and average growth in retail sales was markedly lower in than the previous quarter amid weaker consumer confidence. Meanwhile, business sentiment stabilized. However, household consumption likely picked up at the outset of 2018 as consumer confidence rose to a six-month high in January. Rising employment is reducing slack in the labor market and buttressing wages, while subdued inflationary pressures are boosting consumers’ real purchasing power. Data released by the Central Bank on 29 January revealed that households also made large returns last year from investments in Danish-listed stocks, generating a return of DKK 51 billion from dividends and price gains.

Denmark Economic Growth

The economy is expected to decelerate slightly this year as export growth loses some steam due to a stronger krone resulting from the currency’s peg to the euro. Higher energy prices will also dampen the external sector’s overall performance. That said, accommodative monetary policy will likely prop up domestic demand. On the downside, Denmark’s housing market boom poses the principal risk to the economic outlook. Adverse spillover effects from an unfavorable Brexit, including on the country’s all-important fishing industry, are also headwinds to improved growth prospects. Met the why particular panelists expect GDP to expand 1.9% in 2018, unchanged from last month’s estimate. For 2019, the panel also projects growth of 1.9%.

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Denmark Facts

Bond Yield0.80-1.54 %Feb 20
Exchange Rate6.04-0.57 %Feb 20
Stock Market996-0.39 %Feb 20

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