Danmarks Nationalbank has published its forecasts for the Danish economy. Economic activity rose by 1.5 per cent from the 1st quarter of 2013 to the 1st quarter of 2014. If a decline in extraction of raw materials is excluded, GDP is back at the pre-crisis level. Overall, private sector demand is expected to grow steadily over the coming years, while public sector demand is assumed to rise at a more subdued pace.
Given the forecast for next year the structural balance should be somewhat above its lower limit. "By 2015, the Danish economy is expected to be so far into an upswing that a roll-back of the fiscal easing should be well underway, so that next year will see a marked improvement of the planned structural balance," says Governor Lars Rohde, Danmarks Nationalbank, adding: "This is particularly true given the accommodative fiscal stance and the very low level of interest rates."
Unemployment is declining, and for some professions it is now at the same level as in 2006 during the overheating of the Danish economy. Some areas are also seeing a strong rise in house prices.
"Interest rates are close to zero and the housing market has self-reinforcing mechanisms. Closer monitoring of developments in the housing and labour markets is therefore required," Lars Rohde says.
Inflation is low in Denmark, but this is to a large extent due to temporary global circumstances. "Although wage increases are modest, the low inflation at present is not a sign of deflationary pressures in the Danish economy," Lars Rohde says.
Danmarks Nationalbank's projection
In Danmarks Nationalbank's new projection, growth has been revised marginally upwards compared with the March 2014 projection. Danmarks Nationalbank forecasts GDP growth of 1.5 per cent in 2014, 1.8 per cent in 2015 and 2.0 per cent in 2016. Compared with the March projection, GDP growth has been revised upwards by 0.1 percentage point in all three years.
The annual increase in the Harmonised Index of Consumer Prices, HICP, is forecast at 0.6 per cent in 2014, 1.6 per cent in 2015 and 1.8 per cent in 2016. Compared with the March projection, the forecast is 0.6 percentage point lower for 2014, 0.1 percentage point lower for 2015 and unchanged for 2016.
Enquiries can be directed to Karsten Biltoft, tel. +45 33 63 60 21.