OECD Economic Surveys: Denmark

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1999-0219 (online)
1995-3151 (print)
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OECD’s periodic surveys of the Danish economy. Each edition surveys the major challenges faced by the country, evaluates the short-term outlook, and makes specific policy recommendations. Special chapters take a more detailed look at specific challenges. Extensive statistical information is included in charts and graphs.

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OECD Economic Surveys: Denmark 2016

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10 May 2016
9789264256163 (EPUB) ; 9789264256118 (PDF) ;9789264256101(print)

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This 2016 OECD Economic Survey of the Denmark examines recent economic developments, policies and prospects. The special chapters cover: Macroeconomic and financial risk; Ageing and wellbeing.

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  • Basic statistics of Denmark, 2014

    This Survey is published on the responsibility of the Economic and Development Review Committee of the OECD, which is charged with the examination of the economic situation of member countries.The economic situation and policies of Denmark were reviewed by the Committee on 21 March 2016. The draft report was then revised in the light of the discussions and given final approval as the agreed report of the whole Committee on 14 April 2016.The Secretariat’s draft report was prepared for the Committee by Ms. Zuzana Smidova, Ms. Caroline Klein and Ms. Louise Aggerstrøm Hansen who was seconded from the Danish Ministry of Finance, under the supervision of Mr. Andreas Wörgötter. Research assistance was provided by Ms. Lutécia Daniel. Ms. Heloise Wickramanayake formatted and produced the layout. The previous Survey of Denmark was issued in January 2014.Information about the latest as well as previous Survey and more information about how Surveys are prepared is available at www.oecd.org/eco/surveys.

  • Executive summary

    Danes enjoy high living standards and wellbeing, not the least because of the reform willingness of their governments.Yet, the economic recovery has been fragile and GDP per capita is still below its precrisis levels, although Gross National Income has received a boost from favourable term of trade developments. Investment has been subdued and North-Sea oil production has been a drag on growth. Sluggish productivity growth continues to be a challenge, undermining long-term growth prospects of an economy with an ageing population. In many areas such as domestic services and retail more competitive pressure and innovationwould be a boon to growth. A number of reforms have been launched, but more can be done, for instance boosting competition in retail and pharmacies.

  • Assessment and recommendations

    Denmark’s population enjoys high material living standards, extensive social welfare, and scores highly on a number of dimensions of well-being (Figure 1). The economy is finally set to recover from a protracted recession, and households are enjoying private sector jobs growth and rising real incomes. Unemployment is low and the “Nordic Model”, combining efficiency enhancing market forces, high quality public services, and an encompassing social net, is still working well.

  • Progress in structural reforms

    This annex summarises recommendations made in previous Surveys and actions taken since the OECD Economic Survey on Denmark published in January 2014.

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    • Macroeconomic and financial risks

      The Danish financial sector is big and there is a high degree of inter-connectedness between banks, mortgage institutions and pension funds. At the same time, Danish households have large balance sheets and high levels of gross debt. Even though the high debt levels are matched by large assets, notably in form of pension savings, there are feedback loops with the housing market and households’ balance sheets contributing to macroeconomic volatility. At the same time, the very low interest rate environment may contribute to the building up of risks, notably in the housing market. Given the on-going recovery of the housing market, it is an opportune time to eliminate the debt-bias in taxation, which would strengthen the automatic stabilisers of the fiscal system. In addition, further liberalising the private rental market would help create a more dynamic housing market overall and reduce the need to meet housing needs primarily with the owner occupancy segment.

    • Getting the incentives right in an ageing society

      The generous Danish welfare state relies on a high degree of labour force participation both for financing and in order to ensure social cohesion. This underlines the need for getting work incentives right and improve the employability of vulnerable groups of workers, in particular migrants. Many benefit recipients also face high marginal tax rates for returning to work, creating a barrier for inclusion. Likewise, as the population ages, the need for longer working lives becomes a central aim. In Denmark, much has been done to keep older workers in the labour market, but there is further scope for reducing barriers to work for this group, including through the design of the pension system. Cost pressures at social institutions could be addressed by better reaping the effects on municipal reform, more coordination between different service providers, and open the market for social services, for instance old age care, for private suppliers under a strict quality monitoring framework.

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