Denmark Economic Forecast

Denmark Economic Outlook

February 27, 2018

The economy recovered in the last quarter of 2017, after contracting in Q3 over the previous quarter. Although industrial production contracted year-on-year in Q4, it increased on a seasonally-adjusted quarter-on-quarter basis, while the external sector posted a solid performance, with robust exports of maritime transport services. Nevertheless, retail sales growth was relatively muted, pointing to some weakness in domestic demand at the end of the year. Leading indicators signaled that the economy likely improved in the first months of 2018, with consumer confidence at a seven-month high in February, and the manufacturing PMI sharply up in January as output increased markedly. On 6 February, the ruling government coalition agreed to a EUR 670 million tax cut, mainly aimed at lowering income taxes. The agreement came far short of the EUR 3.1 billion the prime minister’s Liberal Party had hoped to achieve, as talks with its far-right coalition partner collapsed due to disagreements over immigration policy.

Denmark Economic Growth

Lower export growth due to a stronger euro-pegged currency should lead the economy to slow slightly this year. Accommodative monetary policy, low inflation and a tight labor market are, however, poised to boost consumers’ purchasing power, buttressing domestic demand. A boom in the housing market and high levels of household debt are among the country’s main downside risks, but they are unlikely to significantly weigh on the outlook as long as low interest rates prevail. FocusEconomics panelists expect GDP to expand 1.9% in 2018, unchanged from last month’s estimate. For 2019, the panel projects growth of 1.8%.

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Denmark Facts

Bond Yield0.62-1.54 %Mar 15
Exchange Rate6.05-0.57 %Mar 15
Stock Market994-0.39 %Mar 15

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