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New Report Available: Denmark Business Forecast Report Q1 2014

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2013-12-10 10:32:03 - New Country Reports research report from Business Monitor International is now available from Fast Market Research

Although Denmark is not part of the eurozone monetary union, its deep financial and trade links have been strengthened by its pegged exchange rate regime, leaving the economy significantly exposed to spillover effects of the eurozone debt crisis.

A burst housing bubble and subsequent bank failures have made Denmark the hardest-hit Scandinavian economy, and will continue to weigh on growth in the medium term. Although Denmark is in the process of staging a modest economic recovery, the outlook remains precarious as external demand remains sluggish and consumer confidence hinges on a sustained recovery in house prices.

Denmark has been singled out as a relative safe haven given its favourable public debt dynamics and fixed currency regime. However, this inflow of capital has

masked structural economic problems, and should investors start leaving the country it could expose an array of problems, most problematic of which could be a drop in house prices.

Full Report Details at
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The government of Denmark has repeatedly expressed its commit -ment to its pegged currency regime, confirming our view that the country will not join the eurozone in the next decade.

The public sector in Denmark will remain one of the largest in Europe for the foreseeable future. Its deeply ingrained and broadly popular welfare model faces no imminent threats, although gradual and modest reforms are possible in coming years. Although we expect public expenditure to remain elevated, the government's substan -tial tax revenues will enable it to keep deficit and debt levels on a sustainable trajectory.

Major Forecast changes

We have opted to downgrade our long-term growth forecast for Denmark, as we believe the country will struggle to boost productiv -ity levels in the face of a rapidly ageing population. We now expect real GDP to average just 1.2% over the next decade, from 1.6% previously.

Key risks to outlook

A major risk to Denmark's medium-term macroeconomic trajectory stems from ongoing economic and financial developments within the eurozone. Denmark has sizeable trade and investment linkages with the common currency bloc, and a major deterioration in growth in the core countries, or renewed flare up of the sovereign debt crisis, could push Denmark back into recessionary territory.

In light of growing disillusionment with the current government and inter-coalition tensions over the recent passing of tax legislation and social benefit reform, there is potential for strains on the government's political cohesion to continue building. In turn, this could raise the potential for a break-up of the government and early elections being called further down the line.

A sustainable recovery in Denmark's real estate market will remain one of the most important determinants of continued economic growth over the medium term. However, if house prices were to resume a downward trend, this would put a stronger economic recovery out of reach.

The government is in the process of passing legislation mandating stricter capital adequacy rules for the banking sector, while also considering various measures to tighten consumer lending standards. Although this is meant to bolster financial stability, it could serve to stifle bank lending and slow the economic recovery.

Report Table of Contents:

executive summary
core Views
Major Forecast changes
Key risks to outlook
chapter 1: political outlook
sWot analysis
BMi political risk ratings
Domestic politics
Key issues: Welfare reform, Greenland Mining Boom
- Despite a growing realisation of the need for welfare reform, the government of Denmark will face a strong backlash for anything but modest reform efforts. We expect the public sector of Denmark to remain among the largest in Europe for the foreseeable future. Meanwhile, the lifting of a ban on the mining of radioactive materials in Greenland paves the way for the island's eventual independence.
taBLe: poLitica L oVerVie W
chapter 2: economic outlook
sWot analysis
BMi economic risk ratings
economic activity
recovery Gaining Momentum
- The economic recovery in Denmark has gained a more stable footing, and we expect real GDP growth to accelerate to 1.4% in 2014 following 0.4% growth in 2013. Rising home prices will underpin a sustainable rebound in private consumption, while exposure to higher growth EU countries will support a gradual rise in export volumes.
taBLe: GDp BY eXpenDiture
chapter 4: Business environment
sWot analysis
BMi Business environment risk ratings
oil & Gas
chapter 5: Key sectors
taBLe: oiL proDuction, consu Mption anD net eXports, 2011-2016
taBLe: oiL proDuction, consu Mption anD net eXports - Lon G-terM Forecasts, 2017-2022
taBLe: Gas proDuction, consu Mption anD net eXports, 2011-2016
taBLe: Gas proDuction, consu Mption anD net eXports, 2017-2022
other Key sectors
taBLe: pharMa sector KeY inDicators
taBLe: teLecoMs sector KeY inDicators
taBLe: inFrastructure sector KeY inDicators
taBLe: autos sector KeY inDicators
chapter 6: BMi Global assumptions
Global outlook
unchanged outlook, But headline risks remain
taBLe: GLoBaL assuMptions
taBLe: DeVeLopeD states, reaL GD p Gro Wth, %
taBLe: BM i V ersus BL ooMBerG consensus reaL GDp GroWth F orecasts, %
taBLe: eMerGinG Mar Kets, reaL GD p Gro Wth, %

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at

About Fast Market Research

Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

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