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The broad-based economic expansion is projected to continue in 2019 and moderate in 2020. Strong real income growth and continued employment gains will support private consumption. Labour shortages are expected to intensify and result in faster wage growth and a pick-up in inflation. Strong domestic demand will bolster imports and help to reduce the very large current account surplus.
The fiscal stance is expansionary in the near term, reflecting previous policy initiatives, after which it will become broadly neutral. Highly accommodative monetary conditions, resulting from the pegging of the krone to the euro, are expected to continue, which warrants prudent fiscal measures if capacity constraints tighten further. Shifting the tax burden further away from labour and corporate incomes would strengthen incentives to work more hours.
1. Private non-residential gross fixed capital formation.
Source: OECD Economic Outlook 104 database; and Statistics Denmark.
Economic Survey of Denmark (survey page)