Colliers Market Report Denmark 2023

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Colliers Market Report 2023

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2021. This trend is believed to carry over into 2023, sup ported by the consumer confidence indicator having now dropped to a historical low. As 2023 wears on, we expect household spending to bounce back and even exceed the level seen before the onset of the coronavirus pan demic. This may be explained by the fact that price hikes have outgrown wage increases and not that households are expected to increase their spending. Household sav ings ratios were massive during the coronacrisis, which will potentially help to prop up spending in 2023. In addi tion, the Danish Parliament has adopted a relief pack age, introducing financial aid and tax relief to the Danish citizens most affected by high inflation. Finally, con sumer spending is supported by anticipated pay-outs to many citizens that have paid excessive housing taxes. Consumer spending is expected to see a 2.3% decline in 2023 on 2022. Exports Danish export growth was a key driver of renewed eco nomic momentum in the aftermath of the pandemic. Marking the highest annual growth rate since before the onset of the financial crisis, the export growth of 2021 was driven mainly by booming consumer spending in Danish export markets. Since then, factors like the war in Ukraine, inflation and pressure on supply chains have dampened export growth expectations. Although the purchasing power in Danish export markets has weak ened, exports are expected to see a short-lived slow down rather than a prolonged decline. In 2023, like GDP,

Danish exports will be affected by the decision to delay production start at Tyra Field.

Solid and resilient employment 2021 saw record-low Danish unemployment levels due to employment growth to the tune of close to 70,000 employed. However, 2022 may soon set a new record, with unemployment dropping to 2.6% according to Danske Bank, marking the lowest level since before the financial crisis (2.8%). Employment growth was particu larly strong in H1 2022. The Danish labour market has also been affected by the war in Ukraine, with Denmark welcoming some 33,000 Ukrainian refugees, about 4,500 of whom have entered the Danish labour market. Danish businesses were looking to hire additional manpower in H2 2022, and regardless of the gloomier outlook for Danish economy, employment is therefore expected to remain strong in 2023. Danske Bank expects unemploy ment to increase to 3.1% in 2023.

Rising inflation and interest rates The rise in inflation was a red-hot topic in 2022: Up by 10.1% between October 2021 and October 2022, prices took the highest jump in years. Due to the speedy eco nomic recovery after the coronacrisis, the increase in demand outpaced supply in several sectors of the econ omy, sowing the seeds of a rise in inflation in the pro cess. The higher costs incurred by Danish businesses are still passed on to Danish consumers, exacerbating the upward pressure on prices in the consumer mar Danes’ expectations of their own financial situation are the gloomiest ever

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Note: 0 =neutral expectations, above 0 = positive expectations, below 0 = negative expectations. Average annual consumer confidence indicator. Source: Statistics Denmark, Colliers