| Low-growth scenario until 1997 The economic recovery in Denmark, which started in the autumn of 1993, reached its peak in the summer of 1994 and has since lost steam. We expect the drop from high to low growth to remain at least until early 1997. Private consumption will be hurt by deteriorating consumer confidence and only a small rise in real disposable income. The poor export performance in 1995 will continue in 1996. In 1997, however, higher international economic growth and lower domestic wage increases may result in a considerable rise in exports. Inflation and budget deficit fulfil the convergence criteria Tougher conditions on the labour market and weak domestic demand will keep inflationary pressures in check. Inflation is expected to average only 2.1% in 1996 ­p; the same level as in 1995. This meets the Maastricht convergence criterion on inflation. The Danish public sector deficit is still among the lowest in the EU. In 1995, the deficit was only 1.5% of GDP and in 1996, the deficit is expected to rise to only 1.7% of GDP, thus comfortably exceeding the Maastricht convergence criterion of a deficit below 3% of GDP. |