Destinations > Europe > Denmark

Denmark Economy

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Denmark's industrialized market economy depends on imported raw materials and foreign trade. Within the European Union, Denmark advocates a liberal trade policy. Its standard of living is among the highest in the world, and the Danes devote about 0.8% of gross national income (GNI) to foreign aid to less developed countries. Denmark devoted 0.82% of GNI in 2008 for overseas development, including for peace and stability purposes, refugee pre-asylum costs, and for environmental purposes in central and eastern Europe and developing countries, making Denmark one of the five countries that is contributing more than the UN goal of 0.7 % of BNI to aid.

Denmark is a net exporter of food and energy. Its principal exports are machinery, instruments, and food products. The United States is Denmark's largest non-European trading partner, accounting for about 5% of total Danish merchandise trade. Aircraft, computers, machinery, and instruments are among the major U.S. exports to Denmark. Among major Danish exports to the United States are industrial machinery, chemical products, furniture, pharmaceuticals, canned ham and pork, windmills, and plastic toy blocks (Lego). In addition, Denmark has a significant services trade with the U.S., a major share of it stemming from Danish-controlled ships engaged in container traffic to and from the United States (notably by Maersk-SeaLand). There are some 375 U.S.-owned companies in Denmark.

Like the rest of the world Denmark is affected by the global crisis. As of March 2009 unemployment is rising, though not as fast as Denmark’s closest trading partners. Exports have fallen, mainly due to devaluation of trading partners currencies, especially Sweden, Norway and Britian and a contraction of GDP is expected in 2009, estimates ranging from 1.1% to 3.25%. But the Danish economy is fundamentally strong. Since the mid-1990s, economic growth rates have averaged close to 2.5%, the formerly high official unemployment rate stands at around 2.5%, and public finances are in surplus Except for one year--1998--Denmark since 1989 has had comfortable balance-of-payments current account surpluses, in 2008 corresponding to 2% of GDP. Denmark has maintained a stable currency policy since the early 1980s, with the krone formerly linked to the Deutschmark and since January 1, 1999, to the euro. Denmark meets, and even exceeds, the economic convergence criteria for participating in the third phase (a common European currency--the euro) of the European Monetary Union (EMU). Although a referendum on EMU participation held on September 28, 2000 resulted in a firm "no" and Denmark, therefore, has not yet adopted the euro, opinion polls show a majority in favor of EMU. Another referendum on the EMU/euro is expected in 2010. Danes are generally proud of their welfare safety net, which ensures that all Danes receive basic health care and need not fear real poverty. However, at present the number of working-age Danes living mostly on government transfer payments amounts to more than 644.000 persons roughly 23% of the working-age population). The heavy load of government transfer payments burdens other parts of the system. Health care, other than for acute problems, and care for the elderly and children have particularly suffered, while taxes remain at a prohibitive level. More than one-fourth of the labor force is employed in the public sector.


Information by U.S. Department of State




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