Recently Released Market Study: Denmark Business Forecast Report Q1 2013

New Country Reports research report from Business Monitor International is now available from Fast Market Research

by Bill Thompson

(WireNews+Co) - Boston, MA - 07 January 2013

Core Views

The periodic flare-up in sovereign debt stresses in the eurozone has left households and firms across Europe with frayed nerves. Although Denmark is not inside the eurozone, its close proximity to the epicentre of the crisis, coupled with deep financial and trade links that have been solidified by the pegged exchange rate regime, have left the economy significantly weakened.

Denmark has been singled out as a relative safe haven given the relatively more favourable public debt dynamics and the fixed currency regime which has offered euro area investors with an attractive currency hedge. As long as there are doubts about the irrevocability of the eurozone, Denmark will continue to attract capital inflows.

Major Forecast Changes

The Danish economy has struggled in light of the eurozone downturn, motivating a downward revision to our 2012 real GDP growth forecast to -0.1% from 0.5% previously.

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Risks To Outlook

The biggest risk to Denmark's medium-term macroeconomic trajectory stems from ongoing economic and financial developments within the eurozone. Denmark has sizeable trade and investment linkages with the common currency bloc, and a major deterioration in growth in the core countries could push Denmark back into recessionary territory this year.

In light of growing disillusionment with the current government and inter-coalition tensions over the recent passing of tax legislation, there is potential for strains on the government's political cohesion to continue building. In turn, this could raise the potential for a break-up of the government and early elections being called further down the line.

Partial Table of Contents:

Executive Summary

Core Views

Major Forecast Changes

Risks To Outlook

Chapter 1: Political Outlook

SWOT Analysis

BMI Political Risk Ratings

Domestic Politics

Coalition Stability Threatened

- Despite the relatively strong performance of the Danish economy in Q112, the ruling centre-right government's popularity has continued to tumble in recent months, and the recent tax deal reached with opposition parties risks not only alienating core left-wing supporters but also endangering the political cohesion of the ruling coalition. While the next few months could see the ruling Social Democrats seek to appease its left-wing base, we do not expect to see a rapid turnaround in public support any time soon.

TABLE: POLITICAL OVERVIEW

Chapter 2: Economic Outlook

SWOT Analysis

BMI Economic Risk Ratings

Economic Activity

Economy Treading Water

- Although the Danish economy remains outside of the eurozone, the currency peg to the euro and high degree of financial and trade integration have nonetheless propagated the downturn from the euro area. We believe that a sufficiently robust household sector and an entrenched trade surplus will provide some support for the economy, though warn that another flare-up in the eurozone would risk ushering in a deep recession.

TABLE: ECONOMIC ACTIVITY

TABLE: LONG-TERM MACROECONOMIC FORECASTS

Chapter 3: Business Environment

SWOT Analysis

BMI Business Environment Risk Ratings

Chapter 4: Key Sectors

Oil & Gas

TABLE: OIL & GAS - HISTORICAL DATA AND FORECASTS, 2009-2016

Other Key Sectors

TABLE: FOOD & DRINK SECTOR KEY INDICATORS

TABLE: PHARMA SECTOR KEY INDICATORS

TABLE: AUTOS SECTOR KEY INDICATORS

TABLE: TELECOMS SECTOR KEY INDICATORS

Chapter 5: BMI Global Assumptions

Global Outlook

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