Denmark has since 2008 been affected by the international economic crisis. Much has been done to support the economy, but the Danish economy is still facing three key challenges; There is a need to strengthen competitiveness and productivity growth. There is a need to enhance long term labour supply and to improve education. And there is a need for continued modernization of the public sector.
The recovery of the Danish economy after the downturn in 2008 has turned out to be sluggish. The government has taken a number of initiatives to boost demand and underpin employment in the short term. These initiatives have been implemented within the framework of sound public finances.
The international economy has been worse than expected this year. As a consequence recovery of the Danish economy has a longer prospect. GDP-growth is estimated at -0.4 per cent in 2012.
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The international outlook has worsened since the May projection, and growth in GDP is estimated at 0.9 per cent this year, cf. Economic Survey, August 2012. However, the outlook for the Danish economy is better than in the euro area and in particular in relation to southern Europe. In 2013 the growth in GDP is estimated at 1.7 per cent.
In recent months, clear signs of a slowdown have emerged in many parts of the world, especially in Europe. Falling confidence and increased uncertainty in the financial markets point to some weakness in the second half of 2012 in primary Danish export markets.
Denmark benefits from being considered a ”safe haven” among investors and interest rates are currently at a historical low. Combined with the Government’s “kick-start”-package, the reimbursement of contributions to Voluntary Early Retirement Pension (VERP) and improved confidence among consumers this gives reason to expect modest growth in GDP in the rest of this year and in 2013. However, the outlook is subject to considerable uncertainty due to current events in the euro area. These are key messages in the Economic Survey, published today by the Ministry of Economic Affairs and the Interior.
There has been some improvement in the international outlook since the end of 2011, where there was great uncertainty about the handling of the debt crisis in a number of European countries, cf. Economic Survey, May 2012. The growth prospects for Denmark are influenced by the improvement in the international outlook. There is nevertheless still substantial uncertainty about the strength of the recovery of the international economy, especially in the euroarea.
Today the Ministry of Economic Affairs and the Interior publishes the Economic Survey, December 2011, which contains the government's assessment of the economic outlook up to 2013.
The financial turmoil caused by the international debt crisis has continued during recent months, and the IMF, OECD and the European Commission have reduced their growth forecasts considerably.