Bright EU prognosis for Danish economy

Danes are the most optimistic consumers in Europe right now

Feb 26, 2014

There is no doubt that the Danish economy is still recovering from the global financial crisis, but a new report from the EU Commission predicts that 2014 could be the year that it turns around in earnest.

The report, which is entitled ‘Winter 2014 forecast’ and can be read here (in English), predicts the Danish gross domestic product (GDP) will increase from just 0.3 percent growth in 2013 to 1.7 percent in 2014 and 1.8 percent in 2015.

“At the beginning of 2014, confidence indicators are pointing to increased momentum in the Danish economy. Real GDP is forecast to grow by 1.7 percent in 2014 and 1.8 percent in 2015, which is unchanged compared to the projection in the autumn forecast,” the report said.

While private consumption has remained low since 2010, largely thanks to very small wage increases, consumer trust has improved since last summer and housing prices have risen in the larger cities while interest rates have remained low.

Unemployment figures dwindling
The report predicted a modest 0.5 percent increase in employment in 2014, as well as 2015, while unemployment figures are expected to fall slightly from 7.0 to 6.9 percent in 2014 and to 6.7 percent in 2015.

“Unemployment has been on a downward trend since the spring of 2012 and is projected to decline further in the forecast period, in line with employment trends,” the report stated. “According to the European Commission’s consumer survey, consumers have become more optimistic with regard to future developments in the labour market, with a majority now expecting decreasing unemployment over the next 12 months. Compared to consumers in other EU countries, the Danes have been the most optimistic in the last eight months.”

Despite the bright prediction, the commission underlines that Denmark is a small country that is easily affected by financial events on the international stage, and it is therefore too early to say if the Danish economy has moved safely beyond the financial crisis yet.

On the downside, state deficit is expected to rise from 0.3 percent in 2013 to 2.7 percent by 2015, which is still under the three percent EU recommendation.