What’s in store for Denmark’s economy during the rest of 2025?

Denmark’s economy is expected to have a strong overall 2025 despite global instability, according to the government’s latest forecasts for the economy, published on Tuesday.

That comes despite a slow start to this year, which saw GDP in Denmark shrink slightly. The decline is expected to be recovered in the coming months.

Next year could see the economy begin to cool off, according to the outlook.

The overall positive nature of the report comes despite a global trade conflict elicited by United States tariff announcements, which continue to create uncertainty.

“The Danish economy remains in good shape. There’s significant uncertainty due to the global trade war, and the shifting signals from the US administration certainly don’t help,” Minister for Economic Affairs Stephanie Lose said to news wire Ritzau.

Growth is expected to end at 3 percent in 2025, a forecast 0.1 percent higher than predicted in the preceding government projection from December 2024.

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A lower growth of 1.4 percent is now expected in 2026, evidencing a relative cooling-off of the Danish economy – which still compares favourably with many neighboring countries.

Lose said that a recent deescalation from the US on tariffs against the EU and China were not taken into account by the review. As such, growth could end up being higher than expected.

“If none of these things had applied, we’d have been at 3.7 percent. So [the tariffs] are contributing this year by 0.7 percentage points. That shows there’s a sensitivity to the circumstances,” Lose said.

The pharmaceutical industry alone is expected to contribute with 1.1 percent growth in 2025 and 0.6 percent growth in 2026, while the reopening of the Tyra oil field for extraction in the North Sea pulls the figure up by about 0.5 percent this year.

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The export sector, notably with major companies Novo Nordisk and Vestas, has large parts of its production at American factories. This has the effect of moderating the impact of US tariffs.

Employment is meanwhile expected to be up by 29,000 by the end of the year compared to 2024. 

Foreign labour alongside seniors who postpone retirement are cited as the two main drivers of rising employment.

READ ALSO: INTERVIEW ‘There’s no need to restrict international labour coming to Denmark’

Although a lower rise in the employment total of 4,000 is predicted for next year, this is still a significant upward revision compared to previous forecasts. Earlier projections had anticipated employment to remain flat over the two-year period.

Private sector wages are expected to rise by 3.5 percent in 2025 and 3.2 percent in 2026.

Inflation is projected at 1.9 percent in 2025 and 1.7 percent in 2026.

House prices are forecast to rise by 3.6 percent in 2025 and 3 percent in 2026, supported by increasing real wages, lower interest rates and high employment levels.

The raft of positive economic indicators will feed into an upward revision of the state’s projected budget surplus, known as the økonomisk råderum or ‘fiscal room’, looking towards 2030.

Finance Minister Nicolai Wammen has promised a “significant upward adjustment” of the budgetary surplus by the end of June.