Colliers Market Report Denmark 2023

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Colliers Market Report 2023

Robust economy bolstering Denmark for low-growth period Although the pandemic may well have loosened its grip on the global economy, renewed uncer tainty springs from the war in Ukraine and soar ing prices. Because of its strong fundamentals, Danish economy is well-bolstered for a period of sluggish growth. Due to a smooth recovery on the heels of the coronacrisis, Danish economy quickly regained momentum, prompting such a boost in demand that supply could hardly keep up. This triggered a rise in inflation in 2022. The fallout from the war in Ukraine, supply chain bottlenecks along with rising energy prices have further accelerated inflation, now hitting a 40-year high. We therefore foresee a period of sluggish economic growth as central banks have already repeatedly hiked key rates to dampen inflation. However, record-low con sumer confidence notwithstanding, Danish economy appears robust, buoyed by a strong labour market, among other factors. High inflation dampening GDP growth As an offsetting correction to the negative GDP growth seen during the coro navirus pandemic, 2021 saw renewed GDP growth, hitting a 10-year high of 4.9%. This GDP growth carried over into 2022 but has since tapered off. Danske Bank expects GDP growth at 3.0% in 2022, driven mainly by an eco nomic upturn in H1 2022, followed by a setback with negative GDP growth of -1.0% in 2023. One of the factors stunting GDP growth is the prospect of high inflation continuing well into 2023. By the same token, the Danish Ministry of Finance reports of no obvious signs of wage growth. In addition, the decision to postpone production start at Tyra Field in the North Sea until 2024 will have an exceptionally detrimental effect on GDP growth with reduced North Sea output levels. Seen in isolation, the delay is estimated to reduce GDP growth by one fourth according to the Ministry of Finance. Consumer spending cooling Consumer spending was slowing in H2 2022 as mainly the rise in inflation eroded the purchasing power of Danish households. As a result, consumer spending is expected to see a 2.6% (inflation-adjusted) decline in 2022 on