Denmark's economy has been resilient, despite global uncertainty, with a growth-friendly business environment, a strong labour market and sound public finances. In order to boost its high living standards further, policy action should focus on managing pressures on public spending, improving housing and family policies, and raising climate resilience, according to a new OECD report.
The latest OECD Economic Survey of Denmark forecasts that Denmark's GDP will grow by 2.0% in 2026 and 1.8% in 2027, following estimated growth of 2.4% in 2025. Inflation was at 1.9% in 2025 and is projected to decline to 1.1% in 2026.
Strong domestic demand is expected to partly offset weaker exports. Weakening growth prospects in the pharmaceutical sector and slower global trade growth will weigh on the business sector, but a resilient labour market, fiscal policy easing and low inflation will sustain household demand.
"Denmark is well positioned to adapt to global shocks as well as to longer-term structural changes, such as population ageing and climate change," OECD Director of Country Studies Luiz de Mello said, presenting the Survey in Copenhagen alongside Denmark's Minister for Finance Nicolai Wammen. "Denmark's strong performance is due to past reforms that have strengthened the labour market, the fiscal framework and the business environment. To preserve high and sustainable growth, policy action should continue."
Denmark's fiscal framework is robust and, at 31% of GDP in 2024, gross public debt is among the lowest in the OECD. But rising pressures on public spending due to population ageing, climate change and defence requirements will weigh on the budget. Achieving efficiency gains and savings would help keep low levels of public debt, while maintaining high-quality public services.
The affordability and efficiency of the housing market would be improved by reforms of land-use planning, rental regulation and social housing. Changing building regulations to allow greater density, particularly near transport links, would expand housing supply where demand is high. Allowing rents to increase in line with wage growth instead of inflation and reducing the gap between regulated and market rents would improve mobility and enable a better match of housing needs and available units. Access to social housing could be better focused on people most in need.
There is room for policies to support improvements in family life by addressing remaining gaps in the family support system and services. This should include reinforcing monitoring and flexibility of childcare services. Longer parental leave with higher take-up by fathers could also contribute to a more balanced sharing of care responsibilities and reducing the family-career trade-off for mothers.
Denmark is among the most advanced OECD countries in climate change mitigation. The country is on track to meet its 2030 target for reductions in greenhouse gas emissions. However, investment in climate change adaptation has been insufficient, despite high potential returns, with more efforts needed to tackle coastal erosion, flooding and storm surges. A comprehensive and up-to-date national strategy and action plans for climate adaptation would help. National schemes should be developed for large-scale projects, along with predictable long-term funding for smaller local projects.
