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.