Denmark Economic Forecast

Denmark Economic Outlook

May 31, 2022

The economy was set back at the outset of 2022, with GDP recording a marginal decline in sequential terms. The slowdown was largely attributable to sharp moderations in government spending and private consumption, due to a statistical effect and rising price pressures. That said, the scrapping of Covid-19 restrictions towards the end of Q1 should have supported activity somewhat. Moving to the second quarter, momentum is seemingly further being dampened by constrained household spending. Inflation hit its highest value in nearly four decades in April, while consumer sentiment tumbled to its lowest levels on record in April and May due to heightened global uncertainty. That said, the ongoing tightening of the labor market through March should be providing some support. In politics, in early May a cabinet reshuffle took place for the second time since the government took office in 2019.

Denmark Economic Growth

Economic growth will nearly halve this year, largely due to a normalization of conditions and a moderation in domestic demand, following 2021’s recovery. That said, high inflation and strong wage growth will pull private consumption in opposite directions. Elevated household debt levels and geopolitical tensions further cloud the outlook. FocusEconomics analysts see the economy growing 2.9% in 2022, which is up 0.2 percentage points from last month’s projection, and 1.8% in 2023.

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Denmark Facts

Value Change Date
Bond Yield-0.15-1.54 %Jan 01
Exchange Rate6.66-0.57 %Jan 01

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