Analyses focus on current issues of particular relevance to Danmarks Nationalbank’s objectives. The analyses may also contain Danmarks Nationalbank’s recommendations. They include our projections for the Danish economy and our assessment of financial stability. Analyses are targeted at people with a broad interest in economic and financial matters.
The outlook is for lower wage increases and stable inflation despite uncertain times
Pressure on the labour market has eased further over the past six months, and the Danish economy is currently in a neutral cyclical position. Inflation is low, and with the prospect of wage increases compatible with low, stable inflation, inflation is expected to stabilise just below 2 per cent in the coming years. However, geopolitical and trade risks may have a significant impact on the outlook. Several European countries, including Denmark, have announced the need for a rapid and significant increase in defence spending over the next few years. If the capacity pressure in Denmark increases noteworthy, it should be offset by fiscal measures that ease the capacity pressure accordingly.
Key messages
Why is it important?
Danmarks Nationalbank continuously oversees the Danish economy to meet
our objective of ensuring price stability. We therefore assess developments in a number of areas and make macroeconomic projections to get the best basis for assessing whether socio-economic imbalances are building up. As Danmarks Nationalbank’s interest rates are reserved for managing the exchange rate of the krone, it is important that other aspects of economic policy are aimed at ensuring a stable economy. Therefore, we make, for example, fiscal policy recommendations.
This analysis is complemented by a thematic analysis that goes into depth
on the importance of the largest Danish companies for development of the Danish economy. A few large global companies account for an increasing share of economic activity, which means GDP can fluctuate more without increasing fluctuations in capacity utilisation accordingly. This makes it even more important to take a broad view of the economy when planning fiscal policy.
Main chart
Inflation and core inflation are expected to stabilise just below 2 per cent
Note:
Last observation: February 2025.
Source:
Statistics Denmark and own calculations.