Research Update: Denmark 'AAA/A-1+' Ratings Affirmed; Outlook Stable

The Danish economy has so far proven resilient to the adverse economic impact of the war in Ukraine because of its limited direct exposure. Indirect impact will, however, be felt via higher inflation and lower exports, with the weakening economies of Denmark's key trading partners slowing the country's economic growth in 2022 and 2023. The strong recovery in 2021 helped the government to post a high budget surplus and reduce government debt as a share of GDP. In our view, this provides the authorities with substantial fiscal space to absorb potential additional expenditure to cushion the impact of the Russia-Ukraine conflict on the Danish economy. The wealthy and diversified economy, strong labor market, net external creditor position, and sizable fiscal

...- The Danish economy has so far proven resilient to the adverse economic impact of the war in Ukraine because of its limited direct exposure. Indirect impact will, however, be felt via higher inflation and lower exports, with the weakening economies of Denmark's key trading partners slowing the country's economic growth in 2022 and 2023. - The strong recovery in 2021 helped the government to post a high budget surplus and reduce government debt as a share of GDP. In our view, this provides the authorities with substantial fiscal space to absorb potential additional expenditure to cushion the impact of the Russia-Ukraine conflict on the Danish economy. - The wealthy and diversified economy, strong labor market, net external creditor position, and sizable fiscal space will help prevent longer-lasting damage to the economy from the ongoing geopolitical headwinds. - We therefore affirmed our unsolicited '###/A-1+' sovereign credit ratings on Denmark. The outlook is stable....

Research Update