The Danish economy faces uncertainty due to global trade wars and declining consumer confidence, despite a strong labor market and housing sector. The trade war initiated by the U.S. poses a significant threat, potentially impacting Danish exports and overall economic growth. Meanwhile, despite a robust job market and rising wages, Danish consumer confidence has plummeted, leading to cautious spending habits.

The U.S. has become Denmark’s largest export market, making the country vulnerable to potential tariffs. The prospect of tariffs on Danish exports to the U.S. is causing concern, particularly for companies that produce goods outside the U.S. For example, GN Store Nord’s shares have experienced volatility due to its production in China and significant sales in the U.S. The government estimates that the trade war could reduce growth by 0.9 percentage points and cost 11,000 jobs.

Despite global challenges, Denmark’s labor market remains strong, defying previous predictions of a downturn. Employment figures continue to improve, with the government expecting a substantial increase of 29,000 jobs this year, far exceeding initial expectations. In March, Denmark had a record 3,050,151 employed individuals, and this number is projected to rise. This growth is supported by foreign labor and seniors staying in the workforce longer.

However, the strong labor market is not translating into increased consumer spending, as consumer confidence has fallen to its lowest level since the pandemic. Despite rising wages and overflowing bank accounts, Danes are hesitant to spend, possibly due to fears of future inflation and saturation after pandemic-related purchases. Consumer confidence in May dropped to minus 18.4, reflecting concerns about the future.

Meanwhile, the housing market continues to thrive, unaffected by consumer nervousness, with houses and condominiums selling rapidly. Higher prices benefit existing homeowners but make it more challenging for young people to enter the market. The government anticipates price increases of 3.6% this year and 3% in 2026. In Copenhagen, house prices rose significantly in 2024. The holiday home market also reflects the strength of the overall economy.

The Danish economy experienced strong growth in 2024, although figures are influenced by the pharmaceutical industry’s fluctuations. The country achieved a growth rate of 3.7%, a level only seen twice before in this millennium. While the pharmaceutical industry’s volatility can distort growth figures, the underlying trends indicate a positive outlook, supported by a strong labor market.

Denmark’s public finances are in good shape, with the government expecting a surplus this year. The healthy state of public finances provides a buffer against global unrest. The government projects a surplus of DKK 46 billion this year. The national debt is decreasing, positioning Denmark well to navigate economic challenges.