Continued growth in the Danish economy
Today the Ministry of Finance publishes the Economic Survey, May 2011, with the following assessment of the economic outlook until 2012.
- The international recovery appears to have gained a little more momentum in 2011, following a slowdown in the second half of 2010. In the advanced economies growth is now to a higher degree driven by private demand, thereby reducing the risk of a new recession when the expansionary fiscal and monetary policy is rolled back.
- The estimated GDP growth in Denmark has been adjusted upwards by ¼ percentage point in both 2011 and 2012 to 1.9 and 1.7 per cent respectively. The expansion of activity is expected to gradually become more self-sustaining, supported by high growth in Danish key export markets, low interest rates and income growth especially in 2012.
- Unemployment has declined since last summer and is at a low level in historical perspective. Despite the powerful set-back in 2008 and 2009, gross unemployment (and long-term unemployment) is lower than in 2000-2001, when unemployment reached the lowest level following the upswing in the 1990s. The estimates for gross unemployment have been adjusted downwards to 160,000 and 152,000 persons (5½ and 5¼ per cent of the labour force) in 2011 and 2012.
- The public finance deficit is projected at DKK 74 bn (4.1 per cent of GDP) in 2011 and DKK 80 bn (4.3 per cent of GDP) in 2012 compared to a (preliminary) estimated deficit of DKK 51 bn (2.9 per cent of GDP) in 2010. The expected deterioration in 2011 is due to expected low revenues from the pension yield tax following historical high revenues in 2010, as well as realised losses related to the Credit Package etc. In 2012 the deficit mirrors an assumption of reimbursement of Voluntary Early Retirement Pension (VERP) contributions in line with the Pension Reform Agreement. Excluding the reimbursements, the deficit has been revised down in all the years 2010-2012 compared to the December Survey.
- The structural fiscal balance is expected to strengthen from -1.6 per cent of GDP in 2010 to -1.0 per cent of GDP in 2012.
Read Economic survey, may 2011 - forecast here