Growth surprise in Denmark in Q2 raises 2022 GDP forecast

The Danish economy surprised to the upside in Q2, expanding by 0.7% q/q. This showing raised our 2022 GDP growth forecast 0.4ppts, to 3.5%. Inflation is taking a toll on goods spending, but spending on services likely rebounded strongly in Q2, supporting consumption. Nevertheless, our view of the outlook remains unchanged: We see growth flatlining in H2, before easing inflation and a pause in ECB hikes support a pickup in activity over 2023.

What you will learn:

• Gas rationing this winter remains a possibility, but energy-saving measures have lowered the risk. The 2023 GDP growth forecast stands at 1.2%.
• Inflation rose across both goods and services, but energy inflation is showing signs of plateauing and could start to come down over H2, albeit from very high levels and driven by base effects.
• Global food prices have eased recently but food inflation will remain high on an annual basis, likely until H2 2023.