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Denmark Economic Forecast

Denmark Economic Outlook

Defying our panelists’ expectations, the economy dodged a sequential contraction in the final quarter of 2022 and expanded 1.1%, according to a preliminary release. Looking at sectors, industry and culture and leisure contributed to growth. Meanwhile, the increase in employment levels in Q4 likely aided consumer sentiment as it gradually improved through December—although it remained pessimistic. This, coupled with cooling price pressures in November–December, should have aided consumers’ budgets and spending somewhat. That said, the economic setback was likely only delayed; the economy should record a shallow decline at the start of 2023, largely on a base effect. The continued increase of borrowing costs is likely denting investment and keeping business sentiment hostage in pessimistic terrain. More positively, the manufacturing PMI hit a seven-month high in January.

Denmark Inflation

In January, inflation cooled to an eight-month low of 7.7% (December: 8.7%) as price pressures for housing and utilities eased. Conversely, core inflation remained at December’s record high of 6.6% in January. Our panelists expect headline inflation’s downward trend to continue through the end of the year, although it will likely remain above the ECB’s 2.0% target.

Denmark Economic Data

2017 2018 2019 2020 2021
Population (million) 5.7 5.8 5.8 5.8 5.8
GDP (USD bn) 332.4 356.7 346.5 355.4 398.0
GDP per capita (USD) 57 61 59 61 68
GDP (EUR bn) 294.8 302.3 309.5 311.7 336.7
GDP per capita (EUR) 51 52 53 53 57
GDP (DKK bn) 2.0 2.0 2.0 2.0 2.0
Economic Growth (Nominal GDP, ann. var. %) 4.0 2.8 2.6 0.6 7.8
Economic Growth (GDP, ann. var. %) 2.8 2.0 1.5 -2.0 4.9
Domestic Demand (ann. var. %) 2.3 2.7 0.5 -0.1 4.6
Private Consumption (ann. var. %) 2.3 3.5 1.6 -1.4 4.1
Government Consumption (ann. var. %) 0.9 0.0 0.8 -1.4 4.2
Fixed Investment (ann. var. %) 4.0 4.2 -1.3 5.1 6.2
Exports (G&S, ann. var. %) 4.8 3.4 4.5 -6.3 8.0
Imports (G&S, ann. var. %) 4.2 5.1 3.0 -3.6 8.0
Industrial Production (ann. var. %) 2.0 2.0 2.7 -5.5 8.3
Retail Sales (ann. var. %) 0.3 1.6 0.6 3.7 3.9
Disposable Income (ann. var. %) 2.7 1.6 1.2 -1.0 6.1
Wages (ann. var. %) 1.8 2.2 2.0 1.9 2.3
Unemployment (% of active population, aop) 5.8 5.2 5.0 5.6 5.1
Fiscal Balance (% of GDP) 1.8 0.8 4.2 0.2 3.7
Public Debt (% of GDP) 35.9 34.0 33.7 42.2 36.6
Inflation (CPI, ann. var. %, eop) 1.0 0.8 0.8 0.5 3.1
Inflation (CPI, ann. var. %, aop) 1.1 0.8 0.8 0.4 1.9
Inflation (Core, ann. var. %, aop) 1.1 0.7 0.8 0.9 1.1
Inflation (PPI, ann. var. %, aop) 2.5 4.3 -0.6 -2.7 13.6
Certificates of Deposit Rate (%, eop) -0.65 -0.65 -0.75 -0.60 -0.60
3-Month CIBOR (%, eop) -0.31 -0.28 -0.40 -0.23 -0.28
10-Year Bond Yield (%, eop) 0.47 0.22 -0.17 -0.46 0.05
Stock Market (ann. var. of KAX all-share %) 15.9 -13.0 27.4 29.0 27.2
Exchange Rate (DKK per USD, eop) 6.20 6.53 6.66 6.08 6.54
Exchange Rate (DKK per USD, aop) 6.60 6.32 6.67 6.54 6.29
Exchange Rate (DKK per EUR, eop) 7.45 7.46 7.47 7.44 7.44
Exchange Rate (DKK per EUR, aop) 7.44 7.45 7.47 7.45 7.44
Current Account Balance (EUR bn) 23.6 22.0 27.4 25.4 27.7
Current Account Balance (% of GDP) 8.0 7.3 8.8 8.2 8.2
Merchandise Trade Balance (EUR bn) 8.3 5.8 11.2 8.8 4.7
Foreign Direct Investment (EUR bn) 3.1 1.5 6.3 2.6 4.9

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