This is the third time the government has lowered growth expectations since Finance Minister Claus Hjort Frederiksen presented the government's economic report in December. File photo: Thomas Lekfeldt
The latest projections now call for just 1.1 percent growth this year, down from a previously projected 1.9 percent. The 2017 projection was similarly lowered to 1.7 percent growth from 2.0 percent.
When the government released its 2015 results and 2016 expectations in December, leading economists warned that the projections looked too rosy.
“There is […] a real risk that the government in May will present its third growth adjustment,” Nykredit senior analyst Tore Stramer foreshadowed.
The Finance Ministry on Tuesday said that since its December report, “new information on the Danish and international economy” has come to light. The ministry pointed to the drop in oil prices, which are now down to around $42 per barrel, slower-than-expected global economic growth and weak domestic production growth.
“There is no doubt that we face a major economic challenge over the coming years. Therefore it is essential that we prioritize with due care and that all aspects of the public sector focus on fulfilling their duties smarter so that we can get more welfare out of the money that is available,” Finance Minister Claus Hjort Frederiksen said.