War in Ukraine to impact Denmark’s economy

National Bank expects that the conflict will lead to a stagnated growth in 2022 compared to previous predictions made last year

Christian Wenande

Mar 16, 2022

According to Denmark’s central bank, Nationalbanken, the ongoing war in Ukraine will negatively impact the Danish economy this year.

In a report published today, the bank predicts GDP growth of 2.1 percent for 2022, which is 1.0 percentage points lower than the 3.1 percent it predicted for the year in September 2021.

“The war in Ukraine has in a short time become a new and destabilising factor in the Danish and global economy. It dampens growth and increases inflation at a time when inflation and capacity utilisation is already high,” wrote Nationalbanken.

“The Danish economy is generally robust and able to handle new challenges, and it is expected to enter a pause in growth. However, there are risks of a fall in activity.”

Down again in 2024
The bank points to higher price increases as well as instability hitting consumers and investment in Denmark and globally.

Furthermore, the conflict is also expected to increase inflation by about 2 percentage points in 2022.

The bank estimates that expected GDP growth will remain at about 2.1 percent in 2023 and further dwindle to 1.7 percent in 2024.

The Danish economy has been in riveting form as of late, in spite of the Corona Crisis.

In 2021, the Danish GDP grew by 4.1 percent – the biggest increase since 1994.

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