Denmark flag Denmark: Economic outline

Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Being a small country with an open economy and a structural balance of payments surplus, Denmark– although prosperous - is highly dependent on foreign trade. This is why the country has been severely affected immediately after the outbreak of the COVID-19 pandemic. Nevertheless, Denmark proved relatively resilient to the pandemic-related challenges, growing at a strong pace following the lifting of most restrictions. A rapid rebound in private consumption as the economy reopened saw GDP and employment exceed their pre-crisis levels, with growth estimated at 3.8% in 2021 (IMF). In 2022, domestic demand is expected to be bolstered by increased private spending and investment, while the foreign sector should also contribute to growth. The IMF forecasts a growth of 3%, followed by 1.9% in 2023. However, uncertainty remains due to the recrudescence of the COVID-19 virus.

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 2021 the country’s debt burden resumed a gradually declining path (38.8%, from 42.1% one year earlier), which is expected to continue in 2022 (38.5% - IMF). 2021 also saw an increase in the general government budget balance, estimated at -0.9%. Nevertheless, thanks to the phasing-out of emergency measures and strong revenue growth owing to the continued expansion, the budget is expected to turn positive as from 2022 (1.4% according to the EU Commission, although the IMF has a more conservative view – at -0.1%). Consumer prices have accelerated sharply in 2021, fuelled by an upswing in energy prices and increases in tobacco excise taxes. Inflation stood at 1.4%, and growing domestic demand is set to contribute to higher consumer prices over the forecast period (1.6% this year and 1.8% in 2023 – IMF).

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 61,478 PPP in 2021, IMF). The unemployment rate remained relatively low even during the peak of the pandemic, and stood at 5.4% in 2021 when a sharp increase in employment has caused recruitment problems in several sectors. In fact, Denmark experiences endemic labour shortages, which are projected to ease to a certain degree due to the growing labour force driven by a rise in the number of workers from other EU countries and the gradual increase in the retirement age. The IMF forecasts a continued decrease in the unemployment rate, projected at 5.3% this year and 5.1% in 2023.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 347.56e356.09e396.67414.55436.62
GDP (Constant Prices, Annual % Change) 2.1e-2.1e3.83.01.9
GDP per Capita (USD) 59,862e61,154e67,92070,76974,314
General Government Balance (in % of GDP) 1.3-0.9e-2.1-0.2-0.1
General Government Gross Debt (in % of GDP) 33.642.1e38.838.538.7
Inflation Rate (%) 0.70.3e1.41.61.8
Unemployment Rate (% of the Labour Force) 5.05.6e5.45.35.1
Current Account (billions USD) 30.4229.34e27.6028.3529.24
Current Account (in % of GDP) 8.88.2e7.06.86.7

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
Danish kroner (DKK) - Average Annual Exchange Rate For 1 GHS 1.691.521.381.291.17

Source: World Bank, 2015

 

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Latest Update: June 2022