Danish economy predicted to have tough 2023 in OECD report

European nations including Denmark are set to feel the pinch of difficult global economic conditions next year, according to a report from the Organisation for Economic Co-operation and Development (OECD).

Danish economy predicted to have tough 2023 in OECD report
The OECD predict fractional growth for the Danish economy in 2023. Photo: Emil Helms/Ritzau Scanpix

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.

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Danish wind energy giant Vestas makes loss for first time in a decade

Danish wind turbine producer Vestas has registered a loss for the first time since 2013, the company said as it published annual results.

Danish wind energy giant Vestas makes loss for first time in a decade

The company said that increasing costs of energy and raw materials had contributed to the operating loss, as had high inflation.

“Vestas and the wind industry were ready to provide solutions to address the energy crisis, but were constrained by cost increases, logistical challenges, outdated market designs and permitting processes”, the company said in its annual report.

The annual results show a deficit of just under 12 billion kroner for the year.

Preliminary figures released at the end of last month showed that Vestas had turned over around 108 billion kroner in 2022. As such, costs have dragged the company into an overall loss for the year.

Vestas has been forced to raise the price of its wind turbines to adapt to market conditions, it said.

“The increasing price of wind turbines has been and remains a necessity to account for inflation on operating costs and secure the long-term value creation of the industry,” the company said when it announced its 2022 turnover.

“Our focus to protect the value of our products and solutions needs strict discipline to address the raised costs of raw materials and components in dialogue with customers,” it said.

A reduced level of activity is expected at the company in 2023, while pressure from inflation will still be high. That could have an additional negative impact on profit.

Turnover is predicted to be between 104 and 115 billion kroner in 2023.

A degree of uncertainty must however be attached to that prognosis, Vestas stressed.

“The announced expectations try to take account of the situation and challenges as they appear at this point in time,” it said in the results released on Wednesday.

Vestas’ share price was up 2.7 percent on the Copenhagen stock exchange in mid-morning trading, in a market up by 0.8 percent overall.

The wind turbine maker employs around 29,000 people globally including 5,900 in Denmark.