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Economy and Finance

Economic forecast for Denmark

The latest macroeconomic forecast for Denmark. 

Indicators 2023 2024 2025
GDP growth (%. yoy) 0.5 0.9 1.6
Inflation (%. yoy) 3.4 1.7 2.2

For the Danish economy 2023 was marked by subdued domestic demand while strong net exports supported real GDP growth. Higher interest rates weighed on investment and private consumption was impacted by real wage losses experienced over recent years. By contrast, exports benefited from strong international demand, notably for pharmaceutical products. A normalisation of the high levels of inventories accumulated during the COVID-19 pandemic prompted a sizeable negative growth contribution from stocks last year. Real GDP is estimated to have grown by 0.5% in 2023, a significant downward revision from the Autumn Forecast, mainly on the back of data revisions for the second and third quarter.

Economic activity is expected to gain some traction over the forecast horizon, driven by domestic demand. Private consumption is set to gradually strengthen throughout 2024, helped by rising real wages as inflation recedes while 2023 collective wage bargaining outcomes and continued tight labour markets support notable wage increases. Government consumption, including military expenditure, should further contribute to domestic demand growth. Gross fixed capital formation is projected to rebound and then start strengthening during 2024 and into 2025 as interest rates are set to decline. Investments are expected in production and distribution capacity, notably in energy production and infrastructure as well as within the pharmaceutical industry. As a result, real GDP is forecast to expand by 0.9% and 1.6% in 2024 and 2025, respectively. For 2024, this is a downward revision while the forecast for 2025 remains unchanged.

HICP inflation receded over the past year. Annual inflation fell from 8.5% in 2022 to 3.4% in 2023 on the back of weakening energy prices and stabilising food prices. Amid the continued fall in international energy prices, annual inflation is projected to further ease to 1.7% in 2024 before increasing to 2.2% in 2025. This increase is mainly due to base effects, as, in fact, inflation is set to fall to 1.4% in the last quarter of 2025. Compared to autumn, the forecast has been revised down for 2024, but up for 2025. While inflation for several categories of goods is expected to be limited, services are set to hold up inflation somewhat, reflecting continued wage growth.