Outlook for the Danish economy - Moderate boom in the coming years

Analysis - March 2018 - No. 3

Authors Danmarks Nationalbank
Subject Danish Economy; Current economic and monetary trends; Recent economic and monetary trends; International Economy; Economic activity and employment
Type Analysis
Year 2018
Published 14 March 2018
The upswing continued in the 2nd half of 2017 and the Danish economy has entered a boom phase with mounting pressures on the labour market. The expansion has been balanced so far, partly supported by previous reforms that have increased the supply of labour. Growth in GDP is forecast at 1.9 per cent this year and slightly less in the next two years. The economy is well prepared for the boom, which may develop without the build-up of imbalances, but experience shows that the economy can overheat suddenly and violently. The government should be prepared to introduce preventive fiscal tightening with a view to dampening growth in demand if there are signs of overheating.