Denmark’s economic foundation is strong, providing a crucial buffer against the current geopolitical uncertainties.
That was one of the key takeaways from Nordea’s 10th annual Danish Economic and Government Debt Symposium for institutional clients, which featured speakers from Denmark’s government and Danmarks Nationalbank.
“The only thing that’s relatively predictable is unpredictability,” said Denmark’s Minister for Economic Affairs, Stephanie Lose. “It’s a fundamental condition when we look ahead from where we stand now.”
Much of that uncertainty is now tied to the geopolitical situation, ever since the war in Ukraine started, and more recently with the change in presidency in the US, she explained.
“It’s a new world we’re in,” she said, with tariffs being used as a negotiation tool. Just days after the event, President Donald Trump announced tariffs on US imports from Canada, Mexico and China. The tariffs against Canada and Mexico were later put on hold.
“Trade with the US means a lot for Danish exports. Any form of trade war could have consequences,” she said. “But regardless of what hits us, we have a good starting point.”
Any form of trade war could have consequences. But regardless of what hits us, we have a good starting point.
Lose described a Danish economy on firm footing, with high growth, high employment, low unemployment, low inflation and healthy public finances. The government expects the growth tempo to continue in 2025 and also in 2026, at a slightly more moderate pace.
She pointed to employment as a success story for the Danish economy, with over three million people employed in 2024 and the size of the international workforce setting new records. She also noted that inflation is now under control, in part due to the government’s targeted response to the energy crisis.
With interest rates coming down, wages up and inflation under control, there are many objective reasons for consumer purchasing to increase, which will be crucial for lifting growth. But the geopolitical uncertainty and global instability continue to weigh on consumer confidence and household spending.
“We’re living in very uncertain times on many different fronts. In the short term, we will have to make some big decisions that are likely to have an impact on the Danish economy,” Lose said.
The audience also heard from Henrik Nørby, Head of Monetary Policy Implementation and Government Debt at Danmarks Nationalbank, about Denmark’s government debt strategy. He presented a healthy picture of Denmark’s public finances, with government debt at 7.4% - its lowest level since 1977. Consolidation of public debt supports the Danish bond market, which showed strong performance in 2024.
With low financing needs, Denmark’s debt issuance need is “moderate,” according to Nørby. For 2025, the target for bond issuance is 2.2% of GDP – modest compared to most European peers. The national bank is focused on offering a wide range of government securities that attract a broad investor base, and also taking steps to maintain liquidity in the government bond market.
Audience members asked Nørby about whether there were any limits to how large the state’s account at Danmarks Natoinalbank could be, or whether Denmark has any plans to set up a fund similar to the oil fund in Norway with the surplus funds.
“The state’s account has grown in recent years,” Nørby said. “Given needs related to demographics, defence and strategic infrastructure, there’s an expectation that the money will be put to use in the coming years.”