Market Report 2022

Colliers Market Report 2022

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Although the economic setback was deep in 2020, it was only short-lived. Broad political backing, expansive fiscal policies, extensive relief packages and a swift vaccine rollout made it possible to quickly restore activity, softening the blow. As a result, Denmark has emerged faster and stronger from the cri sis than it was feared in 2020. However, in the autumn and win ter months of 2021, the coronavirus pandemic flared up again with the spread of the Omicron variant, giving rise to some uncertainty about the outlook for the Danish and the global economy alike. Strong consumer spending spurt One of the drivers of the stronger activity was a boom in con sumer spending when Denmark reopened in spring 2021, boosted further by the pay-out of the final two weeks’ frozen holiday funds. For instance, consumer spending measured on card transactions was up 10% in the summer months on the pre-pandemic level. The strong spending spurt in the summer months was supported by additional Danish household savings accumulated in 2020. As at year-end 2021, consumer spending had returned to a more stable trend, which is expected to con tinue in 2022. Exports a key driver of economic growth Danish exports were badly hit by the lockdown in 2020, but made a strong recovery in 2021, with prospects of becoming a key driver of economic growth up until 2023. Growth in Danish export markets is expected to be driven mainly by a boom in consumer spending around the world due to reduced restric tions and the rollout of vaccines. However, uncertainty in the

Danish export markets remains higher than usual, with growth hinging on e.g. the risk of renewed waves of COVID-19 in these markets, inflation risks and pressure on global supply chains. Strong recovery in employment 2020 saw large fluctuations in employment, closing at 4.7% at year-end (up 1 ppt on the previous year). These fluctuations continued in the early months of 2021, but as Denmark gradu ally reopened, employment started to pick up again. Thanks to the rollout of vaccines and, by extension, increased immunity in the population, Danish society has largely returned to normal. Q2 2021 saw a record-high increase in employment, and overall, Danske Bank expects unemployment to have dropped to 3.9% by year-end 2021, virtually matching the level recorded before the onset of the pandemic. This year (2022), Danske Bank pre dicts a further drop in unemployment to 3.2%, marking the low est level since before the financial crisis (2.8% in 2008). Interest rates and inflation Inflation has been on the rise ever since society reopened. Among other things, this is attributable to difficulties in pro curing certain goods along with surging energy prices, driving up commodity prices. Similarly, price movements are affected by the higher tobacco prices introduced in Q2 2020, feeding through to the market with a lag at the end 2021. High inflationary expectations in the eurozone and the USA support the stronger prospects of future rate hikes, as cen tral banks use the rate of inflation as a key benchmark for interest rate fixing. In consequence, the Danish long-term

Copenhagen remains Denmark’s premier economic growth engine

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E21

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Copenhagen

Denmark

Note : GDP per capita, DKK ‘000. Copenhagen defined as Copenhagen proper. Source : Statistics Denmark