The Danish economy is forecast to grow at around 2% annually over the forecast horizon, close to its potential, driven by industrial production and renewed North Sea gas extraction. The source of demand is expected to gradually shift from net exports to domestic demand, notably consumption. Inflation is projected to remain below 2%, helped by moderating wage growth and policy measures. Employment is set to increase, but at a slower pace than in previous years, with solid public finances forecasted to show general government surpluses of 2.3% of GDP in 2025, 1.1% of GDP in 2026 and 0.8% of GDP in 2027.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | 2.0 | 2.1 | 1.7 |
| Inflation (%, yoy) | 1.9 | 1.0 | 1.8 |
| Unemployment (%) | 6.1 | 6.1 | 6.0 |
| General government balance (% of GDP) | 2.3 | 1.1 | 0.8 |
| Gross public debt (% of GDP) | 28.9 | 27.7 | 26.8 |
| Current account balance (% of GDP) | 12.0 | 11.9 | 11.4 |
Economic expansion driven by exports and increasing domestic demand
Recent statistical revisions for 2021-2024 implied a smaller carry-over from 2024 to 2025, leading to a lower headline GDP growth figure for 2025. Nevertheless, the Danish economy is expected to expand at solid rates over the coming years, with real GDP projected to grow at about 2% annually in 2025 and 2026 and slightly less in 2027. Industrial production is expected to expand, and the renewal of North Sea gas extraction should further boost real growth this year. Private and public consumption and investments, helped by lower interest rates, are set to become the main factors behind economic growth, replacing net exports. Real wage increases are projected to boost household real incomes, which in turn are expected to translate into higher consumption.
Slowing export growth in 2027
The pharmaceutical industry — particularly Danish-owned production abroad — has been a key driver of export growth. However, goods exports experienced significant volatility in the first half of 2025, partly due to pharmaceutical exports declining after an unusually high fourth quarter in 2024. Current export levels suggest that export growth in 2025 will likely lag behind previous years. Service exports have declined over the past year, primarily due to reduced sea transportation activity. Looking ahead, export growth is expected to be more subdued as a result of higher US tariffs and weaker global trade. However, substantial growth in pharmaceutical production and exports, much of which is produced abroad, and continued growth in other export markets are forecast to sustain the overall export momentum.
Labour market pressures easing
Employment is expected to rise over the forecast horizon, albeit less sharply than in previous years. The labour force is projected to grow in parallel, helped by a net influx of international workers and older workers staying active beyond retirement age. The number of unemployed persons is projected to fall marginally. Labour market bottlenecks appear to be easing as economic growth is set to slow. Real wages are expected to continue growing over the forecast horizon, supporting the anticipated pickup in private consumption.
Inflation remains at low levels
Headline inflation has been stable, below 2% in recent years, recently moving slightly upwards — mainly as a result of higher food prices. Meanwhile, the price pressure from non-energy industrial goods and services has continued to moderate. Going forward, headline inflation is expected to remain low, with an increase from 1.3% in 2024 to 1.9% in 2025 and 1.0% in 2026, before rising again to 1.8% in 2027. The very low inflation in 2026 reflects a temporary reduction in the levy on electricity to the EU's minimum rate, reducing headline inflation by around 0.8 pps. Headline inflation excluding energy and food is expected to be 1.9% in 2025 and 2026, and 1.7% in 2027.
Strong government finances
Denmark's budget surplus is set to reach 2.3% of GDP in 2025, representing a significantly lower surplus than in 2024. This is due to increased government consumption and investment, including higher defence and other spending such as financial assistance for Ukraine. Denmark is projected to record budget surpluses of 1.1% of GDP in 2026 and 0.8% of GDP in 2027. The agreed 2026 budget includes some cuts in excise duties, notably on electricity, which are expected to lower the budget surplus. Continued government surpluses and denominator effects, which are only partly offset by stock-flow effects, are expected to bring the gross debt level to 28.9% of GDP in 2025, and further down to 27.7% of GDP in 2026 and 26.8% of GDP in 2027.
Strong pharmaceutical sector could imply vulnerabilities
While the Danish economy has benefitted significantly from the growth of the pharmaceutical sector, the concentration of growth, jobs and capital in that sector could represent a future vulnerability in the event of adverse developments affecting it. However, production taking place in main markets, notably in the US, limits trade-related risks. In addition, the flexibility of Danish labour and capital markets, together with the relatively low integration of the pharmaceutical sector with other domestic firms, is expected to mitigate other risks.