Denmark’s government has cut its growth forecast for this year, but insisted the economy is slowly improving.
The gross domestic product will increase by just 0.7 percent instead of the 1.4 percent estimated in August, according to the adjusted Economic Survey (Økonomisk Redegørelse), which was presented today by Morten Østergaard, the minister of economic affairs and the interior.
And the country's GDP will only grow by 1.4 percent next year compared to the forecast 2 percent.
Recovering but not as fast as predicted
"The Danish economy is in a good position to recover. We have now had five consecutive quarters of growth and rising employment," said Østergaard in a statement.
"It is not going fast, but the Danish economy is gradually improving."
The improvement is most evident in the labour market, where employment has grown by 18,000 this year – mostly in the private sector.
Low export and households consumption
The rate of growth has been slower this year, partly due to a lacklustre demand from abroad that has resulted in a lower rate of investment, and also due to lower consumption among Danish companies and households.
According to the report, the country's exports will grow by 2.2 percent this year instead of the 4.3 percent forecast in August.
Meanwhile, private consumption will increase by only 0.1 percent in comparison to the earlier estimates of 1.3 percent.
Factfile: The Economic Survey from December 2014 highlights are:
The Danish economy has grown in the last five quarters, but the pace has been modest. Further gradual increases in production and demand are expected, but the pace is estimated to be slower than projected in August.
GDP growth is estimated to be 0.7 percent in 2014 and to increase to around 1.4 percent in 2015 and 2 percent in 2016, mainly due to growth in the private sector.
The main driver of demand remains exports, supported by the gradual recovery in the global economy.
Private consumption has been subdued in recent years, but has now become better aligned with incomes, and households have begun to reduce debt. It is estimated that private consumption will grow as income increases.
The improvement in the housing market is expected to continue – with rising prices across the country.
Total employment has increased since the middle of 2013 and is estimated to have grown by 18,000 people this year. In 2015 and 2016, employment is expected to increase by an additional 5,000 to 7,000 people, mainly in the private services sector.
Fiscal policy is planned to support growth and employment within the fiscal framework provided by the EU rules and the budget law. In 2014 a surplus is expected that will reflect extraordinary income tax on pensions and the restructuring of capital pensions.
