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2006 OECD Economic Surveys: Denmark 2006

image of OECD Economic Surveys: Denmark 2006

This edition of OECD's periodic survey of the Danish economy finds overall good performance but warns of overheating and a weak outlook.  It examines in more detail raising the labour supply to safeguard welfare, improving educational provision and making incentives more compatible with societal needs, and introducing more flexibility and less subsidy in housing. 

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Assessment and Recommendations

The Danish economy is performing very well, reaping the benefits of 25 years of wellmanaged economic reform that have produced sound macroeconomic policies, a flexible labour market and a competition-friendly regulatory environment. Temporary factors such as revenue from oil exploration have also contributed to strong public finances. After some years of slow growth, the economy started to recover in late 2003, and accelerated to a GDP growth rate of 3% in 2005. Private consumption, exports and investment are all expanding. Consumer confidence is close to its highest level since records began three decades ago. Unemployment is historically low, and firms still expect to hire more people in most sectors of the economy. So far, wage inflation has been remarkably subdued, but that could change rapidly as labour shortages are now very clear in construction and seem likely to spread to other sectors.

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