Argentum

DANISH ECONOMY

Unemployment and wages Standing at 4.1% (DST definition) as at end-Q2 2017, the Danish unemployment rate is expected to remain stable in 2018. By European standards, the Danish unemployment rate remains very low as the European unemployment rate was 10.0% in 2016. In Denmark, the low unemployment rate has made qualified labour a sought-after resource, exacerbating the wage pressure in several sectors.

GDP and consumer spending Denmark’s economic recovery is now in its fifth year. So far, the recovery has manifested itself in employment growth in particular, whereas Danish GDP growth has been modest. In 2016, GDP growth was driven mainly by sustained domestic consumer spending combined with surprisingly high public expenditure. However, consumption and exports have picked up and as such, 2017 seems set to produce the highest GDP growth in seven years. Danske Bank predicts GDP growth of 2.4% and 2.0% in 2017 and 2018, respectively. However, a slight slowdown in GDP growth is forecast for 2018 as a lack of qualified labour is believed to cause bottlenecks. In addition, real incomes are believed to erode at a slightly faster pace because of rising inflation. Over the past almost two years, consumer confidence has been substantially restored. Consumer spending is driven mainly by improved household budgets following a decline in unemployment rates and an increase in real wages. If domestic credit-financed consumption really picks up and a labour shortage drives up real wages to a higher level than expected, it could potentially serve to boost the Danish upturn even further. Danske Bank expects consumer spending growth of 1.9% and 2.3% in 2017 and 2018, respectively.

PROJECT ARGENTUM

Inflation IIn 2017, the Danish inflation rate is predicted to rise from the remarkable low recorded in 2016 to 1.1%. According to Danske Bank, the prices of services and wage growth continue to increase at a rate close to 2% p.a., indicating that the low inflation is driven largely by low energy prices as well as lower prices in the ICT and clothing industries.

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