Executive Search in Denmark – 2020 Outlook
Denmark Strong but Fears a Slowdown
The Danish economy is very strong. The GDP growth in 2019 will come in around 1.8%, which is just about the level of recent years. The unemployment rate has dropped a little bit to 3.7%, which is in fact very close to full employment.
Companies are reporting increased problems in recruiting new staff both within Denmark and from EU. This is leading to production limitations, refusal of orders, and increased focus on outsourcing etc.
The outlook for 2020 is blurred. The primary scenario is that the growth in 2020 will be kept at the same level (1.7%) as recent years. This pre-supposes neither a major international decline nor a pronounced labor shortage. Another scenario is that, because of a great uncertainty about the international economy, a major international slowdown can bring growth down to 1.1 per cent.
Such a low-growth scenario may become the reality if export markets evolve as predicted by the most negative international forecasts, or if international forecasts are downgraded to the same extent we have seen over the last six months. A severe Brexit or trade war between the EU and the US would make things even worse.
Exports count for about 50% of the Danish GDP, with Germany and Sweden as the primary markets followed closely by UK and USA. Brexit is not supposed to influence the GDP growth in 2020, but could influence 2021.
The most important concern surrounds any slowdown in the German market which accounts for about 15% of exports. The trade war between the USA and China has been a major concern for about a year and a half, but we have been given a brief respite with the agreement just concluded.
The election just before summer holiday 2019 resulted in a social democratic government. The government is supported by a majority of left wing parties.
As one of the central tasks, the government has already adopted a climate law, which has the overall aim of reducing CO2 emissions 70% by 2030. This very ambitious target requires an estimated investment of at least 40 billion kroner before then and at the same time assumes some technological opportunities that do not exist today.
This may lead to reduced GDP growth in Denmark due to deteriorated conditions of competition for Danish companies. Probably not in 2020, but in the years to come.
On the other hand, it may also turn out that these very large investments can result in a leading position in green energy, somewhat similar to the leading position Denmark has gained in wind energy. This leadership position is in fact the result of initially state-sponsored research in the field.
Financial Services, Banks and Insurance companies are all in some kind of internal transformation derived from a greatly increased focus on money laundering and security. Personnel costs for control and compliance are greatly increased.
Medi-Tech industries such as medico and pharma are increasingly adopting various technical aids or types of technology and have overtaken the agricultural sector in 2019, as Denmark’s largest exporter.
Within the IT Industry, staff of all kinds are in high demand but salaries and related costs have led to increased focus on outsourcing the more traditional jobs to low cost areas such as Estonia, Poland, India, and Philippines. However, at the same time we are seeing an increased focus on the more specialized profiles.