The OECD expects Denmark’s economy to get a marginal growth of 0.1 percent in 2023. The forecast is 1.3 percent lower than in the previous report from June this year.
Despite the OECD considerably reducing expectations for Denmark’s economy, analyst Tore Stramer, senior economist with the Danish Chamber of Commerce, in the Nordic country said the forecast was “mildly optimistic” in comments to news wire Ritzau.
The central bank, Nationalbanken, has forecast negative growth of -0.1 percent next year.
“OECD also points out that the slowing down of growth in the Danish economy is happening at a time when the pressure on the labour market is still high,” Stramer said in a written comment.
“The OECD therefore also recommends that fiscal policy should also be restrictive and further restrictions should be considered if pressure from inflation persists,” he said.
The economic co-operation organisation predicted in September growth of 2.2 percent for the global economy next year. That prediction is retained despite the outlook for Europe.
“This shows that the global economy has not been hit by new, serious shocks in recent months,” Stramer said.
Global economy is significantly impacted by the war in Ukraine, which has caused prives to go up.
Central banks have responded to the situation by putting interest rates up.
Tackling inflation should be a political priority next year according to the senior economist with the Confederation of Danish Industry, Allan Sørensen.
“Inflation will subside in 2023 but will still be at a high level. The fight against inflation will need more interest rate increases while fiscal policy must not cause more [inflation],” he told Ritzau.
OECD notes in its report that a significant degree of uncertainty is attached to the forecasts.
But an increased risk of economic downfall in in play due to “insecurity around energy supply, particularly in Europe over the coming two winters,” Stramer said.
“Additionally, there is a risk that restrictions of financial policies will slow the global economy more than expected,” he said.