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Denmark Economic Forecast

Denmark Economic Outlook

The economy was likely unable to avoid a slight quarter-on-quarter contraction in Q1, following a surprisingly strong GDP expansion in Q4 2022. Challenges mounted at the outset of 2023. Industrial output contracted month on month in January–February on average, markedly below Q4’s expansion. Additionally, the manufacturing PMI revealed conditions in February–March deteriorated at the steepest pace since mid-2022. Borrowing costs were raised further—to their highest since early 2009—and the unemployment rate rose to an 18-month high in February. Both consumer and business sentiment gradually improved through March but remained deeply pessimistic. Meanwhile, monthly retail sales expanded in the first two months of the year, while price pressures softened throughout the quarter; in March, inflation moderated to an 11-month low, likely supporting consumption.

Denmark Inflation

In March, inflation cooled to an 11-month low of 6.7% (February: 7.6%), as price pressures for transport and housing and utilities eased. Similarly, core inflation eased to 6.4%. Our panelists expect the downward trend to continue through 2023 amid higher interest rates and cooling activity. That said, headline inflation will average more than double the ECB’s 2.0% target.

This chart displays Economic Growth (GDP, annual variation in %) for Denmark from 2013 to 2022.

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) 57,822 61,701 59,672 61,031 68,157
GDP (EUR bn) 294.8 302.3 309.5 311.7 336.7
GDP per capita (EUR) 51,280 52,295 53,311 53,536 57,657
GDP (DKK bn) 2,193.0 2,253.3 2,311.0 2,323.9 2,504.2
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 36.7
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 26.2 24.6 30.4
Current Account Balance (% of GDP) 8.0 7.3 8.5 7.9 9.0
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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