The Danish economy is forecast to slow down to slightly less than 2% in 2026 and 2027, with domestic demand as the main growth driver, after several years of growth mainly driven by net exports. Inflation is projected to remain below 2%, partly thanks to a temporary lowering of electricity taxes. Employment is set to increase only modestly, with the rate of unemployment increasing slightly to a level of around 6.5%. Public finances remain solid, while the budget surplus is expected to drop from 2.9% of GDP in 2025 to 0.9% of GDP in 2026, and 0.5% in 2027.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | 2.9 | 1.9 | 1.8 |
| Inflation (%, yoy) | 1.8 | 1.8 | 1.9 |
| Unemployment (%) | 6.4 | 6.5 | 6.5 |
| General government balance (% of GDP) | 2.9 | 0.9 | 0.5 |
| Gross public debt (% of GDP) | 27.9 | 27.0 | 26.2 |
| Current account balance (% of GDP) | 12.5 | 11.4 | 11.1 |
Domestic demand to drive growth
In 2025, the Danish economy proved resilient to geopolitical and trade uncertainties. Real GDP grew by 2.9%, primarily supported by strong export performance. Economic growth is forecast to ease to 1.9% in 2026 and 1.8% in 2027. Private and public consumption and investment, supported by low interest rates, are expected to become the main drivers of economic growth, replacing net exports. Real wage increases, rising employment and several policy measures are set to boost households’ real income, which in turn is expected to stimulate consumption. The expansion in private consumption is, however, set to remain subdued due to the jump in household savings recorded in 2026. This shift towards saving reflects weak consumer confidence amid continuing economic and geopolitical uncertainty. Investment weakened in 2025 but is expected to increase moderately in the next few years supported by construction activity and public investment.
Export growth becoming more balanced
The pharmaceutical industry, particularly Danish-owned production abroad, has been a key driver of export growth in recent years. In 2025, goods exports increased by 6.4%. Pharmaceutical exports continued to expand, though at a slower pace as increased competition in the US market resulted in a loss of market share. At the same time, exports of non-pharmaceutical goods made a larger contribution to overall goods export growth than in previous years, resulting in a more balanced pattern in goods exports. Service exports, however, declined by 1.5% in 2025, primarily due to reduced sea transportation activity. Over the forecast horizon, export growth is expected to slow as a result of the conflict in the Middle East and weaker global trade. Nevertheless, the pharmaceutical production and exports are forecast to continue expanding, driven by falling sales prices, while other export markets are set to sustain their positive momentum.
Employment growth slowing down
Employment is expected to rise only modestly over the forecast horizon, after several years of rapid expansion. The labour force is projected to grow broadly in parallel, helped by a substantial net influx of international workers as well as older workers staying active beyond retirement age. Additionally, the activity rate of migrants living in Denmark has increased. Going forward, the unemployment rate is expected to increase slightly to a level of around 6.5%. Despite recent inflationary pressures, real wages are expected to continue growing over the forecast horizon, supporting the anticipated modest pickup in private consumption.
Inflation expected to remain stable
Headline inflation is projected to remain stable at 1.8% in 2026 and 1.9% in 2027, after 1.8% in 2025, despite sharply higher oil and gas prices. This stability reflects a temporary reduction in the levy on electricity to the EU's minimum rate, reducing headline inflation by around 0.8 pps and offsetting other energy price increases in 2026. The reduced electricity levy entered into force on 1 January 2026 and covers the 2026-27 period. The higher energy prices however are expected to gradually pass through to other goods and services, and headline inflation, excluding energy and food, is expected to reach 1.9% in 2026 and 2.2% in 2027.
Deteriorating government budget surplus
After a surplus of 2.9% of GDP in 2025 Denmark's budget surplus is set to decline to 0.9% of GDP in 2026, before falling further to 0.5% in 2027. This is mainly due to increased government consumption and investment, particular in defence and support for Ukraine. In addition, the 2026 budget includes some cuts in excise duties, notably on electricity, which is forecast to lower the budget surplus further. Continued government surpluses and denominator effects, which are only partly offset by stock-flow adjustments, are expected to reduce the gross debt level from 27.9% of GDP in 2025 to 27.2% of GDP in 2026 and further down to 26.2% of GDP in 2027.
Shipping sector facing vulnerabilities
The conflict in the Middle East creates specific difficulties for shipping, particularly for energy imports. In this context Denmark may be less vulnerable in terms of energy security due to the domestic production of oil and gas from the North Sea. However, as a major shipping nation Denmark could face specific vulnerabilities in case of prolonged shipping restrictions in the region.