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Denmark Country Risk Report Q4 2018

Denmark Country Risk Report Q4 2018

Danish economic growth will remain restrained over the next decade, with real GDP growth averaging just 1.2% annually. Economic expansion will remain con-strained by structural factors such as demographics and high private sector debt.

The large debt burden of the private sector presents significant systemic risks. Low interest rates have allowed households to reduce their debt burdens pro-portional to their incomes and to GDP as a whole, but over the long term, the household sector will remain vulnerable to shocks.

Policy formation is likely to remain constrained by parliamentary fragmentation, even after the next scheduled elections in 2019.Major Forecast Changes

Danish real GDP will grow by 2.0% in both 2018 and 2019, a revision lower from our previous forecasts of 2.1% in each year.

Key Risks



The main long-term risk to the Danish economy remains the extremely high level of household indebtedness. Ultra-low interest rates are underpinning a slow deleveraging process, and as such, the economy's vulnerability to rate hikes remains a concern. While we anticipate interest rates to remain very low for several years, and the short-run outlook for credit expansion is positive, any unexpected growth slowdown or interest rate shock would leave the economy vulnerable.


Executive Summary
Core Views
Major Forecast Changes
Key Risks
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Consumption To Drive Danish Growth As External Concerns Weigh It Down
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
Outlook On External Position
TABLE: CAPITAL AND FINANCIAL ACCOUNT BALANCE
TABLE: TOP 5 EXPORT DESTINATIONS AND GOODS EXPORTS (2017)
TABLE: TOP 5 IMPORT SOURCES AND GOODS IMPORTS (2017)
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Structural Fiscal Position
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES, 2017
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
10-Year Forecast
The Danish Economy To 2027
Growth To Be Restrained By Demographics And Debt
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Denmark Country Risk Q4 2018ContentsPolitical Outlook
Domestic Politics
Danish Government Policy Increasingly Populist As 2019 Election Approaches
Long-Term Political Outlook
Welfare Reform, Migration Are Key Long-Term Issues
Global Macro Outlook
Fewer Negative Surprises, But Trade Risks Rising
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: DENMARK – MACROECONOMIC DATA AND FORECASTS

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