COPENHAGEN (Reuters) – The war in Ukraine will push up inflation and could shave 0.6 to 2.8 percentage points off Denmark’s expected economic growth this year, the finance ministry said on Monday.
Denmark’s economy was poised for a rapid recovery from this year’s pandemic, but the boom will now be slowed as uncertainty stemming from Russia’s invasion of Ukraine takes its toll.
“Denmark’s direct trade with Russia is limited. However, the Danish economy is also indirectly affected by countries like Germany and Finland trading more with Russia,” the ministry said in a statement.
The Danish economy is expected to grow this year by 2.2% in a moderate scenario, 1.6% in a medium scenario and 0.0% in the most difficult scenario, the ministry said, stressing that the projections are still uncertain.
The ministry predicted in December economic growth of 2.8% this year.
Inflation is expected to rise to 4.5% in the medium scenario, from 2.2% in the December forecast.
Denmark’s central bank said last week that it expects growth of 2.1% this year, down from an earlier forecast for growth of 3.1%.
(Reporting by Stine Jacobsen and Nikolaj Skydsgaard; Editing by Angus MacSwan)
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