The Danish economy

After two years of strong growth in GDP of 4.9 percent and 3.8 percent in 2021 and 2022, respectively, there are now prospects for a growth slowdown. The preliminary calculation of GDP growth for 2023 is 0.9 percent. The lower GDP growth can be linked to a reduced private consumption due to rising interest rates and a reduced purchasing power from a historical high inflation. The latest forecast from Danmarks Nationalbank shows an expected growth of 1.2 percent in both 2024 and 2025. The forecast for GDP this year is slightly higher than the last forecast indicating that the risk of a mild recession has been averted. This can be linked to a high foreign demand, which is most likely associated with the noticeable production increase in the pharmaceutical industry. The forecast for GDP next year is unchanged.

Source: Statistics Denmark & Nationalbanken

Interest rates have risen significantly in 2022 and short mortgage rate is still rising moving into 2023. The upward pressure on interest rates can be linked to a combination of several factors, primarily that the central banks are trying to tame the historically high inflation. Furthermore, the war in Ukraine and the Corona pandemic also play a big part in the high inflation. The short mortgage rate has been rising over the past month and is currently at 3.41 percent in June 2023. The long mortgage rate has been more volatile in 2023 and is currently at 4.14 percent in June 2023.

Source: Finance Denmark & Statistics Denmark

Consumer confidence indicates the population’s view of its current and future economic situation and is thus a good indicator of how the general population is affected by Denmark’s economic situation. Consumer confidence in May is at minus 15.1 and has thus risen since April, when it was at minus 18.2. The average for 2023 is minus 21.5. Three out of five indicators that together make up consumer confidence have risen since last month. The judgement of the current situation has become less negative expectation of the future economic situation has risen, which play a big role in the improved consumer confidence.

Source: Statistics Denmark

The latest figures from Danmarks Statistik from March 2023 show an increase in the number of employees of 4,794 persons corresponding to an increase of 0.16 percent compared to April. The number of employees increased especially in the sectors Companies and organizations and Public administration and service. With 46,076 new employees since March 2022, employment remains at peak levels. However, the pressure on the labor market is expected to ease with the growth slowdown in the Danish economy.

Source: Statistics Denmark