Economic Survey, December 2016 presents an updated forecast for the Danish economy and public finances in the period 2016-2018. In the updated forecast the cyclical upswing in the Danish economy strengthens the actual budget balance. The stronger business cycle emphasizes the need for a gradual adjustment of fiscal policy. Fiscal policy is planned in order to reduce the structural deficits towards structural budget balance.
The upturn continues despite heightened international uncertainty.
The upturn in the Danish economy continues. Measured by GDP the pace is not high, but employment is increasing strongly, also stronger than expected. Last year GDP grew by 1.2 per cent, and this year and next year growth is estimated at 1.1 per cent and 1.7 per cent.
The Danish economy is in an ongoing economic upturn even though growth is moderate. This is particularly evident on the labour and housing markets. The conditions for accelerating growth are present, and the focus of economic policy will to a larger extent be on the increase in capacity utilization. Thus, in coming years there will be a need for gradual tightening of fiscal policy from an accommodative starting point, and a close eye should be kept firmly on house-price developments and possible signs of labour shortages. Structural policy is still aimed at strengthening labour supply, increasing productivity, addressing macroeconomic imbalances and ensuring sustainable public finances.
The Danish economy is improving, although GDP growth has been moderate. The improvement is most evident in the labour market where private sector employment has increased by more than 80,000 persons since the end of 2012. In the coming years, employment is projected to continue growing, and fewer idle resources are expected in the economy.
The Danish economy has been strengthened through 2015, and both GDP and employment have grown. The economy is not booming, but growth has been strong enough to drive a significant improvement in the labour market, and employment in the private sector has increased by 66,000 persons since the turnaround in 2012. As the business cycle continues to improve, the need for a gradual reversion of the accommodative fiscal policy grows. This is documented in the Economic Survey, released by the finance minister Claus Hjort Frederiksen today.
Budget Outlook 3, September 2015 gives a brief status on the fiscal policy, the general government finances and the central government finances.
The recovery in the Danish economy has continued into 2015, and in the first quarter GDP was 1.7 per cent above the level in the same quarter in the previous year. The recovery is visible in the labour market, where private sector employment has risen by about 45,000 persons from mid-2013.
The recovery of the Danish economy is well under way, with increasing growth and rising employment. In the second half of 2014 the economy gained momentum, and progress is expected to continue both this year and next year. Growth abroad is no longer the sole driver of the Danish economy, domestic demand has also gained momentum, which is expected to boost growth during the forecast period.
The government’s reforms and initiatives increase the opportunities for growth and strengthen employment and business conditions. The Danish National Reform Programme for 2015 outlines the government’s reform strategy and follows up on country specific EU recommendations.