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. The forthcoming expansion of ECB QE will delay the unwinding of the ultra-loose monetary policy by the Danish central bank. This in turn will delay the slowdown in private consumption growth that the normalisaiton of monetary policy would inevitable entail for later in 2016.
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 nevertheless retain the view that the government will remain unstable. The one-party minority government will have a difficult time passing legislature, making it likely that the cabinet will be ousted before its term ends in 2019.
Denmark Industry Coverage (12)
BMI View: We continue to believe that the combination of rising interest rates and the ending of tax breaks for electric cars will lead to a slowing in sales growth for the Danish new vehicle sector in 2016. We are currently targeting 4.7% growth for the sector as a whole, with commercial vehicles to outperform passenger cars.
|Passenger Car and Light Commercial Vehicle Sales|
|f = BMI forecast. Source: Statbank Denmark, BMI|
Denmark Commercial Banking
|Date||Total assets||Client loans||Bond portfolio||Other||Liabilities and capital||Capital||Client deposits...|
Food & Drink
Denmark Food & Drink
BMI View: Boasting a consumer base of 25mn with some of the strongest purchasing power in the world and offering a favourable business and regulatory environment, the four Nordic markets could offer attractive investment opportunities. That said, there are limited opportunities for growth, as the economic and demographic outlook remains relatively grim. Moreover, the food and drink markets are highly concentrated, presenting significant challenges for new entrants.
BMI View: The Danish construction sector is set to average 4% per annum growth until 2019, 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, commercial real estate and renewable energy expansion. In the long term, growth will moderate significantly as key projects finalise.
Industry growth in 2016 will flatten, showing the same moderately robust 3.4% growth as 2015, before a few years of major project-driven growth over 4% to 2020.
Industry value (in US...
BMI View: On balance, the risks to our forecasts for both life and non-life insurance are to the upside. In an environment of low interest rates and volatile financial markets, the well established life insurers should capture business from banks and other conduits for organised savings. Demographics are contributing to very strong growth in sales of health insurance. The main downside risk comes from price competition in the non-life segment - and especially 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.
Pharmaceuticals & Healthcare
Denmark Pharmaceuticals & Healthcare
BMI View: Despite Denmark's relatively small pharmaceutical market, which is restricted by the government's tough fiscal policies, we believe Denmark will remain an attractive market for drugmakers. The country's ageing population and high per capita spending will ensure demand for innovative medicines remains high. However, like many Western European countries, the increasing pensionable population will contribute to rising healthcare costs, creating the risk of further cost-containment measures from the government.
Headline Expenditure Projections
Pharmaceuticals: DKK20.87bn (USD3.75bn) in 2014 to DKK21.30bn (USD3.14bn) in 2015; +2.1% in local currency...
BMI View: This quarter our fundamental assumptions for Denmark, Finland and 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 three Nordic countries, as more regional instability ...
BMI View: We hold a quite muted view across the Nordics for this quarter - with opaque policy environments emerging in Finland, Denmark and Sweden, as the new governments chart out new courses for their energy policy. As all the countries are aiming to curb costs in their non-hydro renewables sectors segments, we expect growth to slow significantly from the levels of the previous decade.
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...|