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Low interest rates and oil prices are still fuelling the recovery

Danmarks Nationalbank's forecast of GDP growth is 1.4 per cent in 2015, 1.8 per cent in 2016 and 2.0 per cent in 2017. The annual increase in the Harmonised Index of Consumer Prices, HICP, is forecast at 0.3 per cent in 2015, 1.3 per cent in 2016 and 1.9 per cent in 2017. This can be seen from Danmarks Nationalbank's Monetary Review for the 4th quarter of 2015.


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The Danish economy is in a recovery. Though GDP growth halted in the 3rd quarter, as slower growth abroad also affected Danish exports, it is expected to continue in the coming years – driven by factors such as low interest rates and oil prices and a low effective exchange rate of the krone, which supports exports.

This can be seen from Danmarks Nationalbank's Monetary Review for the 4th quarter of 2015. Danmarks Nationalbank has adjusted its growth forecasts for 2015 and 2016 a little downwards following a slightly weaker 3rd quarter, but the general picture of a Danish economy that is picking up remains unchanged.

The labour market is still strong, with rising employment and falling un-employment. Employment is expected to increase by around 65,000 persons from the 3rd quarter of this year to the 4th quarter of 2017. By then spare capacity is expected to be scarce.

Danmarks Nationalbank maintains its recommendation to gradually ad-just fiscal policy – from currently stimulating activity to having a neutral effect on the economy. The Agreement on the Finance Act for 2016 in-volves tightening of fiscal policy, which is appropriate in the current economic environment.

Developments in the housing market have been more subdued during the past six months after having accelerated in the first part of the year. This is more pronounced for single-family houses and to a lesser extend for owner-occupied flats. In connection with the Agreement on the Fi-nance Act for 2016 it has been agreed to put a freeze on land tax in 2016. This will have a destabilising effect on the housing market, particularly in those areas where prices have increased the most. There is an urgent need to find a solution that ensures a link between housing prices and housing taxes.

DANMARKS NATIONALBANK'S PROJECTION

Danmarks Nationalbank's forecast of GDP growth is 1.4 per cent in 2015, 1.8 per cent in 2016 and 2.0 per cent in 2017. The annual increase in the Harmonised Index of Consumer Prices, HICP, is forecast at 0.3 per cent in 2015, 1.3 per cent in 2016 and 1.9 per cent in 2017.

Enquiries can be directed to Julie Holm Simonsen on tel. +45 3363 6022.