Forecast: Denmark’s economic summertime could quickly cool down
DI’s forecast for the Danish economy foresees ongoing growth in Denmark. However, crises from near and far threaten to throw the economy off course.
Blood-red stock markets, a no-deal Brexit, trade war between the world’s economic superpowers. The list of threats to the global economy these days goes on and on. If some of these turn into fully fledged crises, it could cost Denmark dearly and push the economy over the edge.
That is the conclusion of DI’s forecast for the Danish economy, which foresees an extraordinarily unstable period in the Danish and international economy, which could be hit by anything from Trump’s tweet tirades to problems more close to home such as the widespread labour shortage.
DI’s forecast predicts that the Danish economy will pull through and grow by a decent 1.8 per cent this year and 1.7 per cent in 2020. This, however, only applies to a situation where the many threats to the international economy do not materialise and turn into full-blown crises, explains Director at the Confederation of Danish Industry Kent Damsgaard.
“Our prediction for growth in the Danish economy depends on us neither being hit by a greater international crisis, weak growth in exports nor further difficulty obtaining employees. The economy is balancing on a knife’s edge,” he says.
Global decline can cost Denmark dearly
The current uncertainty is highlighted by the latest risk analysis from Oxford Economics, which finds that the risk of a slowdown in the global economy has increased significantly. Global risks are clearly leaning to the negative side.
According to DI’s analysis, a decline in the global economy could mean that Denmark’s GDP growth is reduced to 1.1 per cent in 2019 and 1.2 per cent in 2020. This means that Danish GDP at the end of 2020 would be DKK 27 billion less than in the more optimistic primary scenario, while employment would be 35,000 less.
However, DI’s forecast also points out that if you look solely at the most recent Danish key indicators, so far everything is looking good.
In January the number of employees increased by just over 8,000 compared to the previous month, which constitutes the highest increase ever. Industrial production and turnover also show strong growth – just as export figures are promising, although with rather disappointing results in the past month. In addition, consumers have finally started spending a little more money.
“Things are actually going quite well right now. That’s also why we’ve predicted decent growth in our primary scenario. But it’s important to be aware that this scenario requires that there is no international financial crisis and that companies have access to employees with the right qualifications,” says Kent Damsgaard.
Politically, he hopes to see broad understanding of the precarious situation that both the Danish and international economy finds itself in.
“It’s in the good economic times that we need to equip ourselves for the worse times. That’s also why it’s important that politicians be aware that we need to have some economic firepower left in case disaster should strike,” says Kent Damsgaard.