Denmark: Robust Growth Sustained, with Unemployment Plunging and Inflation Subdued; Economy Rated Fifth Most Competitive in the World
Hilfe Daily Briefing › October 19, 2009
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Summary
Prospects remain for the economy to continue to grow at around 3%. The latest surveys show confidence in industry and among consumers at record levels. March industrial production was up by 7.1% on the year, retail sales volumes rose 5.6% and the unemployment rate has plunged to 4.3% from 5.4% a year earlier. The labour market is now considered to be very tight and likely to tighten even further. Contrary to historical experience, wages have not yet responded. The inflation rate has remained around 2% and the consensus forecast, somewhat unlikely, is for it to remain so in 2007. In its recent report, the OECD has given fulsome praise to the government's stewardship of the economy, which it deemed to be in excellent shape. It recommends measures to raise the supply of labour, for instance allowing more workers in from other EU countries. It also recommends tighter fiscal policy and in particular reducing benefits for housing. House prices have risen particularly sharply in 2005 and continue to do so. The country has also received high praise from the IMD Business School, which raised Denmark to the fifth most competitive economy in the world from seventh in 2005. But a recent Eurostat report found that the Denmark had the second heaviest tax burden in the EU, though taxes fall most heavily on the consumer rather than on labour or business.
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Denmark: Robust Growth Sustained, with Unemployment Plunging and Inflation Subdued; Economy Rated Fifth Most Competitive in the World
High praise from OECD, measures to boost labour supply recommended
In its review of Denmark published earlier this month, the OECD was generous with praise, stating that the economy was performing very well and reaping the benefits of 25 years of well-managed economic reform. Growth is expected to remain above trend in the short term and avoiding overheating...See the full content of this document
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