Kettel Thomsen: Danish economy robust, global risks persist

Global economic development is marked by significant uncertainty, with both the Euro area and global GDP growth forecasts (ECB, IMF) showing downward revisions and risk scenarios.

Financial markets anticipate higher inflation and interest rate increases due to the Middle East conflict, which has lifted short-term inflation expectations in the Euro area.

Despite this, Danmarks Nationalbank's forecast for the Danish economy remains robust, projecting 1.8 percent GDP growth for both 2026 and 2027, rising to 2.0 percent in 2028.

However, higher energy prices pose a risk for increased inflation in Denmark, as shown in the Nationalbank's inflation prognosis and risk scenarios.

The Danish housing market, particularly in Copenhagen, shows increasing risk accumulation, with apartment prices continuing to rise, now followed by Aarhus.

This trend is accompanied by growing credit growth in municipalities with high housing price appreciation.

Mortgage-like bank loans for housing are expanding, now constituting approximately 8 percent of total lending, concentrated in the capital region and Central Jutland.

While borrower robustness for these loans is not significantly different from variable-rate mortgages, the corporate sector generally appears resilient.

However, a scenario of higher energy and debt costs could impact the debt servicing capacity for a portion of non-financial companies.