The Danish economy has regained some of its international competitiveness due to structural reforms that addressed the issue of high labour costs.
Insolvencies expected to level off in 2019
Danish business insolvencies increased sharply in 2015 and 2016 due to the introduction of a new form of company in official statistics and the clearing of a backlog of insolvencies by the national statistics office. It is expected that business failures will just level off this year after a 7% increase recorded in 2018.
Robust domestic demand sustains growth
The Danish economy is expected to grow about 2% in 2019, driven by robust domestic demand, while exports remain susceptible to weaker external demand.
Private consumption is sustained by historically low interest rates, rising disposable incomes due to a tight labour market and low inflation. Both government consumption and industrial production are expected to pick up in 2019.
The Danish economy has regained some of its international competitiveness due to structural reforms that addressed the issue of high labour costs. However, Danish exports could be affected by lower Eurozone demand, especially from Germany. Additionally, Brexit could have a negative impact on exports, as the United Kingdom is Denmark’s third largest export market.
Public finances are healthy, with small budget surpluses expected in 2019 and 2020. This provides room for fiscal stimulus if required.
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