Denmark raises economic forecast for 2022

Bloomberg

Denmark is raising its economic growth forecast for 2022 as the Nordic country’s strong labour market will help the economy overcome most global headwinds, according to government documents seen by Bloomberg News.
Gross domestic product will likely expand 3.4% this year, up from the government’s main scenario in March of 1.6%, the documents showed. The economy will grow 1.9% next year, down from 2.3% in the finance ministry’s March
forecast. The government is scheduled to present the forecasts at a press conference in Copenhagen.
“We came out of 2021 at a very high pace and have a good starting point for continued growth,” Finance Minister Nicolai Wammen said in the documents. Still, he warned that the economy would experience a slowdown later in 2022.
The labour market of AAA rated Denmark has remained resilient amid the pandemic and has so far withstood any fallout from 2022’s lockdowns in China and the war in Ukraine. The gross unemployment rate is currently at 2.5%, the lowest level in 14 years.
The main growth driver for the economy in 2022 will be private consumption and to some extend exports and investments, the ministry said. However, there’s a risk that exports may suffer if the war drags down the economies of Denmark’s closest trade partners, including Germany, the ministry said.
There’s also a risk that accelerating inflation may cause economic activity to stagnate or even decline “in parts of 2022,” the ministry said.
Inflation has jumped to the highest level since 1984 as energy prices soar, and consumer confidence has dropped to the lowest since 1988, according to the country’s national statistics office.