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Denmark Country Risk Report Q1 2016

Denmark Country Risk Report Q1 2016

Core Views

Real GDP growth in Denmark will continue to be supported by a steady improvement in external demand, mainly from the eurozone.

The forthcoming expansion of the European Central Bank's quantitative easing programme will delay the unwinding of ultra-loose monetary policy by the Danish central bank. This in turn will delay the slowdown in private consumption growth that the normalisaiton of monetary policy would inevitable entail for later in 2016.

While Prime Minister Lars Løkke Rasmussen's hard-line nationalist stance towards Europe's migration crisis has bolstered public support for the conservative right on Denmark's political scene, we nevertheless retain the view that the government will remain unstable.

The one-party minority government will have a difficult time passing legislature, making it likely that it will be ousted before its term ends in 2019.

Major Forecast Changes

We have revised upward our real GDP growth forecast for Denmark to 1.7% in 2016 (from 1.6%), as continued improvement in the external economic landscape and the anticipated delay in monetary policy normalisation will continue to provide a strong tailwind to growth in the coming quarters.


Executive Summary
Core Views
Major Forecast Changes
Key Risks
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
One-Party Minority Government Unlikely To Last Its Term
While Prime Minister Lars Løkke Rasmussen's hardline nationalist stance towards Europe's migration crisis has bolstered public support
for the conservative right on Denmark's political scene, we nevertheless retain the view that the government will remain unstable. The
one-party minority government will have a difficult time passing legislation, making it likely that the cabinet will be ousted before its term
ends in 2019.
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Reform Of Welfare State Key Issue Over Coming Decade
Denmark will experience broad political stability over the coming decade, but changes to the welfare state will see divisions emerge
between left and right, and old and young. Meanwhile, opposition to immigration will increase. The government will continue to face
demands from Greenland for full independence, although this scenario will not play out in our 10-year forecast period to 2024.
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Growth Outlook
Macro Outlook Stable On External Demand And ECB QE
Real GDP growth in Denmark will continue to be supported by a steady improvement in external demand, mainly from the eurozone.
The forthcoming expansion of ECB quantitative easing will delay the unwinding of ultra-loose monetary policy by the Danish central
bank. This in turn will delay the slowdown in private consumption growth that the normalisation of monetary policy would inevitable entail
for later in 2016.
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
Chapter 3:BMI Global Macro Outlook
Global Outlook
Exit The Dragon
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %

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