As we move into the final months of the year, the economic outlook is marked by both cautious optimism and a range of unpredictable factors that make it difficult to plan with certainty. According to Chief Economist Las Olsen, we find ourselves in an unusual situation: “It is a bit of a strange situation we are in, because there is really a lot to worry about politically, and we can also see that people are generally quite pessimistic about the economy,” he explains. Conflicts, trade disputes, and uncertainty surrounding the U.S. Federal Reserve are among the elements that cause concern. Still, the short-term picture is not as bleak as one might fear: “When we talk about the outlook in the short term – the economic outlook for the rest of this year – then it doesn’t actually look that bad.”
Olsen points out that the global economy continues to show moderate progress, even if growth is far from booming. “There is still progress in the global economy. This has actually been the case over the summer as well – despite tariff hikes and unrest – we have still seen this positive development,” he says. Consumers’ purchasing power is improving, real wages are rising, and inflation remains under control, creating the foundation for normalized growth. “There is a basis for having reasonable growth – not strong growth, but a normalization.”
Slowdown in the US
The development in the United States plays a central role in the global outlook. In recent years, the country has surprised with strong growth driven by productivity increases and a growing labor force. But according to Olsen, that picture is changing: “That is clearly no longer the case. Immigration has completely come to a halt, and that means we are not going to see the same growth rates as we have from the U.S. in recent years.” He expects growth going forward to settle between 1 and 1.5 percent, compared to the 2–3 percent seen previously. The risk is that this slowdown could be sharper than anticipated, potentially pushing both the American and global economy into recession.
Volatile stocks
For Denmark, the picture is mixed. Major companies such as Novo Nordisk and Ørsted dominate the headlines and have faced volatile expectations. Yet Olsen stresses that even after downgrades, Novo Nordisk still plays a significant role: “They still expect strong growth this year and next year… Novo Nordisk alone contributes perhaps one percentage point to Danish GDP growth.” At the same time, revised statistics have adjusted the broader picture: “Denmark is instead an economy that very much resembles the rest of Europe – an average European economy in terms of growth, just with Novo Nordisk on top.”
Most Danish companies, however, are not primarily dependent on the U.S. market but on nearby countries such as Germany and Sweden. Growth there has been modest but is expected to improve. Olsen highlights Germany’s massive investment plans in defense, infrastructure, and healthcare: “They will spend what corresponds to over 2% of GDP annually for the next 10 years… and this will also mean that in the longer term it will be necessary to have a somewhat higher interest rate level in Europe.” In the short term, however, he sees a positive combination of lower interest rates, increased household purchasing power, and higher public demand that can benefit Danish companies.
The soft landing
One interesting difference from earlier economic cycles is that the world appears to have avoided a deep crisis following the surge of inflation in 2021–22. “We have actually achieved what is called a soft landing,” says Olsen. Inflation has come down to more reasonable levels without a sharp rise in unemployment, and in Denmark unemployment remains low. This means we are not facing a dramatic recovery phase but rather a normalization.
But this unusual soft landing also leaves room for new risk factors. Olsen warns that the greatest unpredictability comes from the U.S.: “There is enormous unpredictability, and you can also say that with these very large tariff hikes… we have to acknowledge that it has been more than 100 years since we last experienced tariffs of this magnitude. To believe that we know what is going to happen – we can’t.”
Thus, the economic landscape is one where cautious optimism coexists with uncertainty. Growth is present, but not excessive. Political and trade-related tensions can quickly change the rules of the game, and no one can say with certainty how the next chapter will unfold. As Las Olsen sums up: “There may well be something we are overlooking – something that can hurt in ways we are not used to.”
Learn more at the webinar
Las Olsen visits EGN´s webinar studio on September 11th. During this global live webinar, Olsen will speak a lot more about the current economic situation and how it affects everyday business life. Sign up for the event right here. Be aware that only EGN members can participate.
If you are interested in learning more about our peer groups, click right here.
