Denmark raises growth forecast despite war and inflation

© Reuters. FILE PHOTO: Views of Copenhagen are seen from the top of Trinitatis Church in Denmark on April 29, 2018. REUTERS/Benoit Tessier

COPENHAGEN (Reuters) – Denmark’s economy could grow as much as 3.4 percent this year, despite the negative impact of the war in Ukraine and record high inflation, the Danish Finance Ministry said on Thursday, sharply revised up from its March estimate.

“We ended 2021 on a very high note, providing a good starting point for continued growth,” Finance Minister Nikolai Varmen said in a government report released on Thursday.

“While we must expect the Danish economy to slow this year, activity levels will continue to remain high,” Wammen said.

The forecast is an upgrade from the ministry’s March forecast, in which the economy is expected to grow by 1.6% under a medium risk scenario.

However, with Russian gas supplies to Europe cut off, the ministry expects economic growth of just 2 percent.

The government forecasts growth of 1.9% in 2023.

The ministry expects inflation to rise to 5.2 percent this year in its main scenario, up from a forecast of 4.5 percent in March.

Denmark’s central bank said in March that it expected the economy to grow by 2.1 percent this year.

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