The Danish economy in progress
Today the Ministry of Finance publishes the Economic Survey, December 2010, with the following assessment of the economic outlook until 2012.
- The international recovery has continued at a moderate pace over the summer and in the autumn. The industrialised economies are recovering faster than previously expected. This especially applies for Sweden and Germany, Denmark’s two largest export markets. The recovery has been strongest in countries where there is confidence in fiscal policy and in the countries’ ability to meet their debt obligations.
- In Denmark, GDP has increased the last five quarters and by a total of 3.7 per cent since the trough in the 2nd quarter of 2009. Growth has been higher than previously expected and higher than in the euro area.
- The estimated GDP growth has been adjusted upwards to 2.0 per cent for 2010. The expansion is expected to become gradually more self-sustaining and continue at a moderate pace with growth rates of 1.7 and 1.5 per cent in 2011 and 2012.
- Unemployment (including people in activation measures) was some 13,000 persons lower in October than expected in the August Survey. Unemployment has increased surprisingly little in light of the significant set-back in 2008 and 2009. The estimated level of unemployment has been revised downwards by 5,000 persons to 166,000 and 172,000 persons (5¾ and 6 per cent of the labour force) in 2010 and 2011 respectively. In 2012 unemployment is expected to come down to a level in line with 2010.
- The public finance deficit is estimated at DKK 63 bn (3.6 per cent of GDP) in 2010 and DKK 84 bn (4.3 per cent of GDP) in 2011. Higher revenue from pension yield taxes (which fluctuate significantly) has led to a lower estimated deficit this year compared with the August survey. In 2012 the planned fiscal consolidation will lead to a lower deficit of DKK 62 bn (3.4 per cent of GDP).
In 2011, the fiscal policy as a whole – i.e. including the expansionary measures during the crisis – will increase the activity level significantly, while the effect on growth is expected to be rather neutral. This reflects that the lagged effects of the expansionary measures in 2009 and 2010 more than offset the effects of the consolidation measures planned for 2011.
The Minister of Finance Claus Hjort Frederiksen states:
“Over the last two years we have made a significant effort to get the Danish economy going again. That has paid off, and we are now entering a period with growth becoming more self-sustaining. Economic policy is still supporting demand, but going forward, the key objective is to increase growth potential and consolidate public finances. Denmark remains outside the euro area and is a small, interest rate sensitive economy. It is therefore particularly important to ensure that confidence in economic policy prevails.”
Read Economic survey - english summary, december 2010 in pdf here