Denmark’s economy is maintaining strong momentum despite geopolitical tensions, higher energy costs and uncertainty in global trade, according to the latest economic assessment published by the Danish government.

The government’s Economic Report forecasts that Denmark’s gross domestic product will grow by 3.7% in 2026, while employment is expected to increase by around 27,000 people during the year. The figures were presented by Tax and Growth Minister Jakob Engel-Schmidt on August 27.

The government said Denmark’s economic performance remains notably stronger than the expected average across the European Union. The latest forecast puts average EU growth at about 1.1% for 2026, significantly below Denmark’s projected expansion.

One of the important factors behind Denmark’s growth is the continued expansion of the pharmaceutical industry. Rising exports from the sector have contributed significantly to economic activity, although the government says growth has increasingly spread across other parts of the economy as well.

Inflation is also expected to remain relatively contained. The government forecasts average inflation below 2% in both 2026 and 2027, which could provide some relief to households after the cost pressures experienced in recent years.

The government estimates that a typical Danish working family with two children could see its purchasing power increase by approximately DKK 12,500, assuming the economic forecast develops as expected.

However, the report also identifies challenges, particularly among small and medium-sized enterprises. The government says activity among these businesses has developed more slowly since 2019 than in previous years.

Small and medium-sized companies account for approximately 99% of Danish businesses, making their performance an important part of the country’s wider economic outlook. Officials say excessive administration and bureaucracy remain among the issues that need to be addressed to allow smaller companies to grow more effectively.

The economic outlook comes against a difficult international backdrop. The Danish government points to geopolitical tensions in the Middle East, the war in Europe, higher energy prices and international trade-policy disputes as factors that could create additional risks for the economy.

Despite these challenges, the latest forecast indicates that Denmark enters the remainder of 2026 from a relatively strong economic position.

The government says the immediate priority is to ensure that economic growth becomes broader and that small and medium-sized businesses are able to participate more fully in the expansio

The latest assessment therefore presents a mixed but largely positive picture: Denmark is recording strong growth and employment, while policymakers remain focused on protecting the economy from international uncertainty and addressing weaknesses affecting smaller businesses.

The figures were published by Denmark’s Ministry of Taxation and Growth through the official government portal, Regeringen.dk.