Denmark: Economic outline
Being a small country with an open economy and a structural balance of payments surplus, Denmark - although prosperous - is highly dependent on foreign trade. Nevertheless, the country proved relatively resilient to the pandemic-related challenges and was only marginally affected by the effects of the Russian invasion of Ukraine. After expanding by 2.5% in 2023, growth was estimated at 1.9% in 2024 by the IMF (2.4% according to the EU Commission), with net exports as the main driver. For 2025 and 2026, a reduced contribution from the pharmaceutical sector is anticipated as it approaches peak production levels. In contrast, domestic demand is expected to play a larger role, driven by lower interest rates, rising real wages, improved consumer confidence, and more relaxed fiscal policy. Growth is projected at 2.5% in 2025 and 1.8% in 2026 as per the EU Commission, with significant contributions from the Tyra gas field in 2025. Key short-term risks include geopolitical tensions and weaker global demand, while long-term GDP growth will face challenges from unfavourable demographics.
The country’s public accounts are quite healthy, with one of the lowest debt-to-GDP ratios in Europe: although the measures taken by the government to address the pandemic led to an increase in recent years, the ratio stood at around 28.2% in 2024 and is expected to follow a downward trend (27.3% in 2025 and 27.1% in 2026 – IMF) thanks to continued primary surpluses and nominal GDP growth. In 2024, the government recorded a surplus of 2.3% of GDP, as modest expenditures were supported by low unemployment and strong income growth. The fiscal stance remained expansionary. Looking ahead to 2025, the surplus is projected to decline to 1.5% of GDP, partly due to personal income tax reform and increased government spending, including military expenditures. By 2026, the government surplus is expected to shrink further to 0.9%, primarily driven by the impact of an ageing population (data EU Commission). In 2024, the recorded monthly HICP inflation rate was significantly lower than the euro area average, mainly due to a faster pass-through of falling energy prices. Services inflation remained higher than the headline inflation but also decreased markedly throughout the year. Inflation for 2024 was expected to average 1.3%, with a rise to 1.9% in 2025 and 1.7% the following year, driven by expectations of lower energy and food prices and reduced upward pressure on wages (EU Commission).
The Danish economy is characterized by an equitable distribution of income and extensive government welfare measures, with one of the highest GDP per capita in the world (USD 71,978 PPP in 2025, IMF). Employment grew by an estimated 0.8% in 2024 and is expected to continue expanding, though more modestly, in 2025 and 2026. The slower employment growth helped alleviate labour market pressures, aided by an influx of workers from abroad. Last year saw sizeable wage increases, partly due to the outcome of the 2023 collective wage bargaining, which helped compensate earners for the real wage losses caused by inflation. In 2025, new private labour market collective wage agreements are expected to be negotiated. Overall, the unemployment rate rose from 5.1% in 2023 to 5.8% in 2024 and is anticipated to stabilise at that level in 2025 and 2026.
Main Indicators | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
GDP (billions USD) | 407.09 | 412.29 | 431.23 | 448.53 | 465.97 |
GDP (Constant Prices, Annual % Change) | 2.5 | 1.9 | 1.6 | 1.4 | 1.4 |
GDP per Capita (USD) | 68,619 | 69,273 | 71,967 | 74,303 | 76,593 |
General Government Balance (in % of GDP) | 1.7 | 1.2 | 0.8 | 0.4 | 0.3 |
General Government Gross Debt (in % of GDP) | 29.7 | 28.2 | 27.3 | 27.1 | 27.1 |
Inflation Rate (%) | 3.4 | 1.8 | 2.2 | 2.0 | 2.0 |
Unemployment Rate (% of the Labour Force) | 2.8 | 2.9 | 3.0 | 3.0 | 3.0 |
Current Account (billions USD) | 40.04 | 37.29 | 40.13 | 40.39 | 40.77 |
Current Account (in % of GDP) | 9.8 | 9.0 | 9.3 | 9.0 | 8.8 |
Source: IMF – World Economic Outlook Database, 2016
Note: (e) Estimated Data
Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
Danish kroner (DKK) - Average Annual Exchange Rate For 1 GHS | 1.69 | 1.52 | 1.38 | 1.29 | 1.17 |
Source: World Bank, 2015
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Latest Update: February 2025