Danish economy recovering but the recovery is weak and fragile
In recent months, Denmark has received substantial attention due to the appreciation pressure on the Danish krone. Denmark has now enjoyed positive GDP growth for six consecutive quarters. Last year was the first full ye…
In recent months, Denmark has received substantial attention due to the appreciation pressure on the Danish krone.
Denmark has now enjoyed positive GDP growth for six consecutive quarters. Last year was the first full year of positive economic growth since 2011.
Employment has picked up and the number of employed persons in Q4 14 was 31,800 higher than the latest trough in Q1 13.
Also, the housing market is recovering but the recovery is concentrated mainly in the Copenhagen area.
Danske Bank notes in a report on Monday:
We expect GDP to increase by 1.6% in 2015, rising to 2.0% in 2016, supported mainly by the low oil price.
Denmark will not leave the peg as the peg is a political decision that enjoys full support across the political parties.
The Danish central bank will continue to use its conventional measures (rate cuts and intervention purchases) in order to counter the appreciation pressure going forward.
The Danish central bank has expressed that it will do 'whatever it takes', which includes introducing new unconventional measures if necessary
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