In his speech, Thomas Harr pointed out, among other things, that trade and geopolitical developments lead to persistently high economic uncertainty. A year ago, the focus was on trade conflict and US tariffs, but right now, risks stem from inflation driven by the war in the Middle East. Both abroad and here in Denmark, inflation is expected to rise as higher energy prices are passed through to other prices over time. However, we are not facing a 2022 scenario where inflation rose above 10 per cent in many countries.
"A shock to energy prices directly affects fuel and heating costs, but the shock also moves through to the electricity markets, freight costs and the price of everything that requires energy to produce or move. Understanding how energy shocks are transmitted to economic activity and prices is important for assessing the depth and duration of the impact of the war in the Middle East. It is something we follow very closely at Danmarks Nationalbank," says Thomas Harr.
In addition to the economic uncertainty stemming from geofragmentation and geopolitical tensions, developments in AI have also had a major impact on investments and developments in the financial markets. In the coming years, we will learn more about how AI affects the economy, e.g. via productivity gains and structural changes in the labour market.
In his speech, Thomas Harr emphasized that many macro trends will be crucial to economic development in the coming years. This also applies, for example, to developments in cross-border capital flows, which have led to greater global imbalances than before. This has the potential to increase financial and macroeconomic risks at global level.
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