By Teis Jensen
COPENHAGEN, March 15 The Danish economy is
steadily heading towards a "moderate boom", but if growth is to
be accelerated, new reforms are needed to increase the labour
supply or productivity, the central bank said on Wednesday.
The central bank raised its forecasts for Denmark's economic
growth slightly to 1.6 percent this year and next year, above
the 1.1 percent the economy grew last year.
"The Danish economy is heading towards a moderate boom with
gradually intensifying labour market pressure," it said.
It said the forecast assumed that labour supply would
increase as a result of reforms already implemented, but that
the high growth rates seen in earlier booms were not likely to
"We are not where we were in 2007. But we do see an
increasing pressure in some sectors, not least in the
construction sector where the unemployment is low and more and
more companies are saying that their production is limited due
to lack of labour," governor Lars Rohde told reporters.
The primary domestic risks hinge on whether it will be
possible to attract sufficient labour to meet the growing demand
over the coming years, the central bank said.
"Fiscal policy should not stimulate demand further. If
growth is to be accelerated, new reforms are needed to increase
the labour supply and/or productivity, but the potential is
limited," it said.
It said a small further increase in the retirement age
could provide a substantial contribution to the labour force in
"This also applies if the immigrant participation rate is
increased or more qualified labour is attracted from abroad," he
Economy Minister Simon Emil Ammitzboll has called for urgent
job reforms to avoid a workforce shortage. The liberal minority
government will work throughout the remainder of the year to try
and get a majority in parliament for its proposals.
(Editing by Alison Williams)