Unpredictability defines global economy, Denmark resilient
Danmarks Nationalbank Governor Signe Krogstrup stated that unpredictability has become a fundamental condition for the global economy. Despite this, the Danish economy remains robust, though facing risks from energy prices, trade barriers, and AI.
Global headwinds, Danish resilience
The global economic outlook is marked by higher energy prices, which are dampening growth and fueling inflation, according to IMF forecasts for the Euro area and the US.
Financial markets are also anticipating higher interest rates in both regions.
For Denmark, however, the economic picture remains robust despite the uncertain global landscape.
Danmarks Nationalbank projects a steady GDP growth of 1.8 percent in 2026 and 2027, rising to 2.0 percent in 2028.
Inflation in Denmark is expected to be 1.8 percent in 2026, influenced by these higher energy prices and upcoming tax changes, with core inflation at 2.2 percent for the same year.
The Nationalbank's latest forecast indicates that oil and gas prices, both realized and future, continue to be a significant factor.
Three pillars of uncertainty
High uncertainty is a fundamental condition, stemming from energy prices, trade barriers, and the economic impact of AI.
The Middle East conflict poses a significant risk, potentially driving oil and gas prices higher, which could lead to increased inflation and more subdued growth for the Danish economy.
Global trade uncertainty has reached historical highs, partly due to rising average tariffs on US imports.
This environment differs from 2022, as high post-pandemic consumer demand and very low interest rates are no longer prevalent.
Denmark leads EU countries in corporate AI adoption, with implications for productivity, labor markets, financial stability, and cyber risks.
Navigating the new normal
The speech underscores a paradigm shift where constant volatility is the baseline, demanding proactive risk management from policymakers.
While Denmark's strong position offers a buffer, the interconnected nature of global risks means vigilance against external shocks is paramount.
This assessment highlights the need for adaptive economic strategies rather than reactive measures, especially concerning energy and trade.