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Economic Forecast May 2016: After nine years, the Danish economy will reach the level prior to the financial crisis

DI predicts a growth in GDP of 0.9 per cent in 2016 and therefore GDP is expected to finally be back at the same level as in 2007. This means that it has taken nine years to regain what was lost when the financial crisis hit Denmark and the rest of the world.

Next year, DI expect a growth of 1.8 per cent. This is, however, based on the condition that productivity regains what was lost during the decline seen up until first quarter 2016. Should this not be the case, there is a risk that the potential economic recovery will be slowed by the fact that companies are unable to recruit the employees needed.

In early 2015 the numbers indicated that we were about to return to the GDP level of 2007. However, the development in exports was very disappointing in the second half of 2015 and therefore it will only be well into 2016 that we will be able to return to the level of production from 2007.

DI estimates a growth in GDP of 0.9 per cent in 2016 and 1.8 per
cent in 2017. This means that yet again the level of growth has been slightly reduced compared to DI’s economic forecast from
February 2015. If Denmark is to have a growth of 1.8 per cent next year, it is vital that growth is not hampered by a lack of qualified labour.

Significant drop in productivity

So far, the decline in production in the second half of 2015 is not
reflected in the development in employment. The increase in
employment continued in the third quarter of 2015 and grew
even stronger in both the fourth quarter of 2015 and in the first
quarter of 2016. This implies that productivity has dropped considerably since the second quarter of 2015.

 


PUBLISHED: 3/6/2014 LAST MODIFIED: 7/4/2016