Economic forecast for Denmark

In 2023, the Danish economy experienced subdued domestic demand, but strong net exports contributed to real GDP growth. Higher interest rates dampened investment, and private consumption was affected by real wage losses. However, exports, particularly pharmaceutical products, benefited from robust international demand. The normalization of inventories accumulated during the COVID-19 pandemic led to a significant negative growth contribution from stocks. Real GDP grew by 0.5% in 2023, lower than previously forecasted.

Looking ahead, economic activity is expected to pick up, driven by domestic demand. Private consumption is anticipated to strengthen gradually throughout 2024, supported by rising real wages and modest inflation. Government consumption, including military expenditure, is also expected to contribute to domestic demand growth. Gross fixed capital formation is projected to rebound and strengthen, especially in energy production, infrastructure, and the pharmaceutical industry. Real GDP is forecasted to expand by 0.9% in 2024 and 1.6% in 2025, with a downward revision for 2024 but no change for 2025.

Inflation, as measured by the Harmonized Index of Consumer Prices (HICP), decreased over the past year, driven by lower energy prices and stabilized food prices. Annual inflation is expected to further ease to 1.7% in 2024 before increasing to 2.2% in 2025, mainly due to base effects. Despite the forecast revision downward for 2024, it is expected to rise slightly in 2025, influenced by continued wage growth, particularly in the services sector.

https://economy-finance.ec.europa.eu/economic-surveillance-eu-economies/denmark/economic-forecast-denmark_en