Our comprehensive assessment of Denmark's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Denmark, as well as the latest industry developments that could impact Denmark's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Denmark before your competitors.
Denmark Country Risk
Real GDP growth in Denmark will continue to be supported by a steady improvement in external demand, mainly from the eurozone. However, the large debt burden of the private sector will restrain growth over a multi-year horizon.
While Prime Minister Lars Lokke Rasmussen's hardline nationalist stance towards Europe's migration crisis has bolstered public support for the conservative right on Denmark's political scene, we retain the view that the government will remain unstable. The one-party minority government will have a difficult time passing legislation, making it likely that the government will be ousted before its term ends in 2019.
Major Forecast Changes
Taking into account the 0.4% q-o-q real GDP contraction in Q315, combined with inventory...
Denmark Industry Coverage (13)
BMI View: We believe that a combination of slowing economic growth and the phased ending of tax breaks for electric cars will lead to an easing in sales growth for the Danish new vehicle sector in 2016. We are currently forecasting 5.2% growth for the sector as a whole, with commercial vehicles to outperform passenger cars.
|Passenger Car and Light Commercial Vehicle Sales|
Denmark Commercial Banking
|Date||Total assets||Client loans||Bond portfolio||Other||Liabilities and capital||Capital||Client deposits...|
Food & Drink
Denmark Food & Drink
BMI View: A consumer base with some of the strongest purchasing power in the world, combined with a favourable business and regulatory environment, will continue to be an attractive characteristic for food and drink companies operating in Scandinavia. That said, market concentration and a weak demographic outlook will limit growth for new entrants.
Latest Updates & Industry Developments
Throughout our forecast period to 2020, household spending will experience healthy growth in the Nordics, given...
BMI View: The Danish construction sector will be a regional outperformer in the medium term, on the back of strong investment in the infrastructure sector, driving a solid project pipeline, with public and private financiers looking to the sector for safe investments. Areas that will particularly benefit from government, EU and institutional investor interest will be the rail sector and renewable energy expansion. In the long term, growth will moderate significantly as key projects finalise.
Latest Updates And Structural Trends
We have slightly revised down our medium-term industry growth outlook due to a constrained economic picture. However, at an annual average 3.1% over 2016-2020, the sector will be a regional outperformer....
BMI View: Conditions remain broadly favourable in Denmark's insurance sector. Demographics and the introduction of innovative products are boosting sales of health insurance. At a time of low interest rates and volatile financial markets, the life insurers appear to be capturing business from banks and other conduits for organised savings. We look for life and non-life premiums to grow by 4% and 3% respectively, both through 2016 and annually through the remainder of the forecast period. The main downside risks are in the non-life segment and come from price competition - particularly in the motor vehicle and property insurance sub-sectors.
Denmark Medical Devices
BMI View: Denmark represents a mature medical device market with above average per capita spending. Cost containment measures will continue to increase pressure to scale back the country's generous welfare system. As such the market will only show low growth with a forecast US dollar CAGR of 1.4% for the 2014-2019 period. Local production is focused on consumables and patient aids, primarily hearing aids, therefore the majority of the market will remain heavily dependent on imports.
Oil & Gas
Denmark Oil & Gas
BMI View: We expect a partial but temporary recovery in oil and gas volumes over the medium term, as small developments come online. Past 2019 however, production will resume to the downside. While the country should remain a net oil and gas exporter throughout most of our forecast period, exports will become increasingly thin. We note increasing downside risks to our production forecast as the start-up date for the Hejre field is increasingly uncertain.
Pharmaceuticals & Healthcare
Denmark Pharmaceuticals & Healthcare
BMI View: Although Denmark has a relatively small pharmaceutical market compared to its Western European counterparts, its high per capita spending makes it an attractive market for innovative drugmakers. An aging population and sizable non-communicable disease burden will drive high-value medicine sales over the long-term. However, despite an end to high levels of austerity measures seen in the past years, we believe the government is likely to implement more price cuts on pharmaceuticals in the future due to rising healthcare costs.
Headline Expenditure Projections
Pharmaceuticals: DKK21.50bn (USD2.82bn) in 2015 to DKK21.64bn (USD3.11bn) in 2016; +0.6% in local currency terms and +10.2% in US dollar terms. Forecast remains inline with last quarter.
BMI View: This quarter our fundamental assumptions for Sweden continue to be relevant. Taking into account relatively positive macroeconomic expectations for the Nordic region as well as sector trends, we continue to expect power consumption growth in 2016. Similarly, we maintain our long-held view that, while growth expectations in the region are improving, economic woes in the eurozone remain a major risk factor for the consumption and generation outlook of the country, as more regional instability...
BMI View: This quarter our fundamental assumptions for Denmark continue to be relevant. Taking into account relatively positive macroeconomic expectations for the Nordic region as well as sector trends, we continue to expect power consumption growth in 2016. Similarly, we maintain our long-held view that, while growth expectations in the region are improving, economic woes in the eurozone remain a major risk factor for the consumption and generation outlook of the country, as more regional instability could undermine their economic activity.
BMI View: A slowing wind power sector, due to high penetration of intermittent wind in the power mix and muted power consumption growth, weighs on our outlook for overall non-hydropower renewables capacity growth in Denmark - despite relatively robust growth in the solar and biomass segments. An increase in policy uncertainty, due to governing party Venstre's aim to water down Denmark's ambitious carbon emissions targets, aligns with our expectations of a growth slowdown.
BMI View: We have a subdued outlook for the Danish telecommunications sector largely owing to the high degree of saturation prevalent in the market. The main recent driver of growth has been the dedicated mobile broadband offers. The failed merger between Telenor and TeliaSonera will continue to force operators to compete on the basis of price. We believe that the fixed market provides room for growth. Operators are moving towards more advanced broadband services, such as DOCSIS3.0 and fibre, to regain market share from mobile broadband, and using bundled services to lower churn. This is the first step in the battle for convergence, where deepening the customer base through upselling and not widening with new acquisitions becomes the core strategy.
|Organic Growth Elusive...|
Denmark's tourism industry is one of the smaller overall markets in the Western Europe region. In part this is due to limited awareness of the country's many tourism attractions, particularly those outside of the capital Copenhagen, as well as intense competition from other European destinations. We do expect to see steady growth in international arrivals during the forecast period between 2016 and 2020, though we note that Denmark's reliance upon neighbouring states (such as Germany, Sweden and Norway) leave its tourism market highly vulnerable to any regional economic declines. Over the longer term, expanding transport connections to markets further afield in North America and Asia will bolster tourism growth and create a more sustainable market.