Denmark has a relatively low exposure to macroeconomic imbalances, especially compared with its western European peers. The country’s low current risk score is predominantly the result of low inflation, a high current account surplus and low fiscal risk. The flip side to Denmark’s high current account surplus, however, is that it leaves the country disproportionately exposed to a eurozone recession or break-up scenario. A further point of concern is the large budget deficit, which opens up the risk of fiscal austerity measures and can put government debt on a negative trajectory, despite a relatively modest current debt-to-GDP level.
In terms of economic disparity, the Nordic countries are relatively homogenous and fare well, especially when compared with their western European peer group. The Nordic economic and political model – high taxes and comprehensive social security systems – is clearly effective in dampening the European trend towards income and wealth inequality. But the shift towards an ageing population makes current levels of pension and social security benefits unsustainable. An exception is Norway, which can use its sovereign wealth fund to fulfil its pension liabilities and social security obligations.
NOTE: The risk bars indicate the world distribution of the particular risk, from the lowest-scoring country to the highest. The lower the score, the lower the risk or exposure to the particular indicator (a lower score is always positive).
All data is sourced from Zurich Risk Room
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