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DENMARK IN 2024

What will happen in Denmark’s economy in 2024?

Denmark is expected to enjoy the second highest growth rate in the EU in 2024, as the continuing success of Novo Nordisk's new weight-loss drug makes up for otherwise declining exports.

Published: 15 December 2023 12:10 CET
Updated: 7 January 2024 08:27 CET
What will happen in Denmark's economy in 2024?
Shoppers on the Strøget shopping street in Copenhagen this summer. Photo: Thomas Traasdahl/Ritzau Scanpix

Slowdown not depression

According to Eurostat, Denmark’s Gross Domestic Product (GDP) will grow 1.4 percent in 2024, a rate beaten only by Cyprus on 2.1 percent, and which, together with Ireland (0.6 percent) and Portugal (0.1 percent), makes it one of only four countries in the EU expected to enjoy positive growth. 

In its forecast for the year, Danske Bank put the economy’s resilience down to the exceptional success of Novo Nordisk’s new product, Wegovy. 

“The Danish economy is particularly strong and GDP growth is significantly higher than in most other EU countries,” the bank wrote in its Nordic Outlook from December. “This is primarily due to the great success of Novo Nordisk and the rest of the pharmaceutical industry.”

But, the bank wrote, the rest of the economy was undergoing a similar slowdown to the rest of Europe.  

“The reality for the broad range of companies is far more mixed,” it wrote. “Economically, the development in Denmark is reminiscent of what we see in many other places in Europe, only with Novo Nordisk on top.”

“Novo Nordisk,” the bank explained, “will, by all accounts, continue to have such high growth in production, that it will drag the total Danish GDP up, even if it’s hard to say by how much.”

The hotel and restaurant and tourism industries are expected to continue the growth they experienced in 2023, while Denmark’s other export industries are increasingly struggling, weighed down by weak global demand. 

The strong Danish krone, the bank said, was hurting the competitiveness of Danish exporters, especially when competing against rivals in Sweden, where the Swedish krona is very weak. 

As a result of the falling order books reported by exporters, the bank in December reduced its 2024 growth prognosis from 1.7 percent to 1.1 percent.  

Interest rates set to begin to fall 

Inflation has fallen more sharply in Denmark than many expected. Inflation had fallen to 0.1 percent in Octover 2023, the bank reported, predicted that over the whole of 2023 it would end up at about 3.3 percent, before falling to 1.9 percent in both 2024 and 2025. 

“Inflation has fallen extremely rapidly this year, also faster than in most other countries,” Danske Bank wrote.  

The bank expects Danmarks Nationalbank, the country’s central bank, to shadow the interest rate decisions of the European Central Bank (ECB) in 2024 so that the Danish krone remains stable against the euro. 

Last year it raised rates slightly less than the ECB — to 4.2 percent compared to the ECB’s 4.5 percent — hoping to weaken the overly strong krone. 

A Danske Bank graphic showing how sharply inflation has fallen in Denmark. Photo: Danske Bank

Resilient property market to stay resillient

The prices of houses and flats in Denmark have continued to grow in 2023 even as they fall in most other countries, with Danske Bank expecting them to have grown on average by about 1.5 percent in 2023. The bank expects house and apartment prices to continue to grow at this pace, increasing by 1.5 percent again in 2024. 

This growth depends on the soft landing for the Danish economy continuing. 

“If there is a harder landing, then we could see renewed falls in the price of housing,” the bank warned. “If the economy sees greater setbacks, we see properties in the more expensive areas most exposed to a fall in prices.” 

More expensive areas could also see prices negatively affected next year when the new property tax comes into force, the bank added. 

A Danske Bank graphic showing how property prices recovered in 2023 following a dip in 2022. Photo: Danske Bank

Employment to remain strong 

Denmark’s employment rate was “exceptionally high” in the first half of 2023, Eurostat said in its country profile, and according to Danske Bank there has been “quite a sharp increase in the labour force, especially due to the influx of foreign labour”.  

But the after starting to increase in the second half of the year, both Eurostat and Danske Bank expects unemployment to start increasing in 2024, as struggling exporters lay off staff, with the unemployment rate, according to Eurostat, climbing from 4.6 percent in 2023 to 5.2 percent in 2024 and 5.5 percent in 2025. 

Dankse Bank points out that wages will also increase in 2024 as a result of collective bargaining agreements struck between unions and employers in 2023, which, it warned, would further hurt Danish competitiveness.  

“Wage growth over the coming years will probably be higher than with Denmark’s trading partners, and competitiveness will thus be eroded after having improved in recent years,” it said. 

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ECONOMY

Explained: Why Denmark’s economy is looking in such extremely good shape

Denmark's economy is growing faster than the government expected, inflation is falling faster, and employment is holding up better. We explain why the new economic forecast shows Denmark has achieved the softest of soft landings.

Published: 16 May 2024 15:41 CEST
Explained: Why Denmark's economy is looking in such extremely good shape

 “When I stood here a year ago and presented my first financial statement, it was with a message that the Danish economy was heading for a soft landing. We have since been strengthened in that assessment,” Stephanie Lose, Denmark’s economy minister, said at a press conference announcing the government’s Økonomisk Redegørelse, or financial statement, for May. 

In the press statement, she said, “optimism is returning to the Danish economy”, with the economy likely to improve further in the coming year.

“We have carried out reforms that make Denmark richer and help to secure the necessary workforce for Danish companies,” she said. 

How has the government changed its growth forecasts? 

The government has increased its expectation for Denmark’s growth rate since its last statement in December, with it now expecting 2.7 percent growth in 2024, up from the1.4 percent it expected for the year in December. 

It has also upgraded its expectations for 2025, predicting growth of 1.8 percent compared to the 1 percent it expected back in December. 

Lose said that the pharmaceutical company Novo Nordisk, which is expanding rapidly as a result of the success of its weight-loss drugs Ozempic and Wegovy, had driven much of Denmark’s recent growth, with the reopening of Denmark’s gas field, the Tyra field, would start to contribute to growth soon.

“In the past two years, the pharmaceutical industry in particular has driven growth in the Danish economy, while there has been stagnation or decline in large parts of the rest of the economy,” she said. “In the coming years, other industries again look set to contribute to growth. Added to this is the reopening of the Tyra field in the North Sea, which also contributes to growth in GDP.” 

What does the government expect to happen to inflation? 

Denmark’s inflation rate fell rapidly from a peak of over 10 percent in October 2022 to below 2 percent in September 2023, where it has stayed ever since. But Lose said she expected the rate to edge up over the coming years. 

“Inflation has fallen quickly and faster than expected,” Lose said. “In the new forecast, we expect inflation to rise in the coming months, as the prices of services and energy pull in the direction of slightly higher inflation.” 

What does the government expect to happen to employment? 

Thanks mainly to Novo Nordisk increasing staffing to manage the success of its new drugs, and the bounce back from the pandemic, employment has also held up better than expected.

Employment soared by some 160,000 people between 2021 and 2023, and the government now expects the number of employed people to grow by a further 13,000 in 2024 but to then fall by 18,000 in 2025. 

“Employment has long been at a sky-high level, so it is estimated that we will see some adjustment. But we do not expect an extensive setback, because the Danish economy stands on a rock-solid foundation,” Lose said.

What does the government expect to happen to housing prices? 

The government has significantly upgraded its expectations of what will happen to the price of domestic property this year. It now expects prices to increase by an average of 3.2 percent in 2024 and 3 percent in 2025, a rise of two percentage points on the 1.2 percent rise for 2024 it expected when it made its last forecast in December. 

This is due to the continued strong labour market, which has seen rising incomes and wage increases in Denmark as a result of new collective agreements, at the same time as Denmarks Nationalbank is expected to cut interest rates. 

This rise follows two consecutive years of falling real house prices in 2022 and 2023. 

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