curving office building

Greetings from the Ambassador

Greetings from the Ambassador

September has been and still is a very busy month with visits from a number of Danish Ministers and parliament delegations. These visits demonstrate the close relationship between Denmark and USA. Over the last few months, we have also hosted visits by both the Trade and Development Minister and the Minister for Business and Growth. These Ministerial visits and the Transatlantic Trade and Investment Partnership negotiations (that has been a focus for ADBC this year) emphasize the importance of trade to the Danish economy.

The Danish Government’s goal is to increase exports to the United States by 25 percent by 2016. While ambitious, this goal seems to be reachable. The United States economy is twice the size of China’s economy [OECD stat, US $, current prices, 2012] and, according to Trade Council statistics, the US is the largest export market for Danish goods outside the EU. In fact, overall the US is the 3rd largest export market for goods and services.

The US economy is continuing its recovery and is expected to continue solidly expanding through next year. According to Blue Chip consensus, GDP is expected to grow by 2.1 percent this year and 3.0 percent next year. At the same time, the unemployment rate is continuing to come down. It is expected to fall from 6.2 percent in the second quarter of 2014 to 6.0 percent in the fourth quarter and 5.5 percent by the end of next year. Concomitantly, corporate profits are expected to grow from .3 percent this year to 6.4 percent next year. Housing starts are expected to rise to 1,010,000 units in 2014 from the 2013 level of 930,000. Next year housing starts are expected to rise even higher to 1,200,000.

Inflation is staying firm and is expected to continue to be contained. Short-term interest rates should remain low but may begin to rise next year. Treasury yields are also expected to rise next year, consistent with the anticipated tightening of monetary policy. [Blue Chip Econometric Detail, Vol.30 No.3]

The healthcare market continues to be important with pharmaceuticals and medical devices making up about 19 percent of total expenditures [Euromonitor International]. In fact, the US has the highest expenditures for healthcare as a percentage of GDP of any other OECD country – with approximately twice the OECD average. [OECD Health Statistics 2014]

Moreover, the visit of the Minister for Children, Gender Equality, Integration and Social Affairs has focused on elder care and sharing experiences on the Danish model. There could be a significant market for elder care solutions in the US with its growing population of seniors.

The renewable energy sector is also growing. According to Fortune magazine [September 3, 2014], 12,500 new clean energy jobs were created so far this year in the US. Solar installations are up 41% from last year — with Arizona, California, New York, and Massachusetts leading the way. The wind industry has created 2700 new jobs (Vestas is responsible for a good many of these jobs), and GM and Tesla are expected to create 1900 new jobs building electric vehicles. To date, the renewable energy sector has created jobs in 29 states. While still to be determined, the new Environmental Protection Agency rules regarding limiting carbon could push the renewable energy sector even more.

At the same time, according to the European Commission Spring forecast, “real GDP growth is forecast to advance with moderation in 2014, at 1.6% and 1.2% respectively in the EU and the euro area, before gaining some further speed to respectively 2.0% and 1.7% in 2015.

“In contrast to the sharp but short-lived upturn in 2010, the current recovery in the EU and euro area is more balanced regionally” and more sustained. Unemployment is decreasing and is lowest in Germany and Austria at 4.9 percent and across the EU down by .4% from the same time in 2013 to 11.5% [European Commission, Eurostat]. According to the Softwood Export Council, “Housing starts in the European Union were 1,295,000 in 2013 and are forecast to rise 3.9% in 2014 to 1,345,000 and by 4.2% to 1,402,000 in 2015.”

Therefore, we can conclude that the US economy is well into the recovery after the financial crises, and data points to improved conditions in Europe. With the US as Denmark’s largest market outside the EU and with an increase in economic growth, the emphasis on exports to the US seems reasonable. With Denmark strong in both pharmaceuticals, medical devices and clean tech, we should be able to increase exports by the Government’s stated goal. We are doing our best to assist in this positive direction. However, companies are the main driver and the members of ADBC and its mission of improved trade and investment between Denmark and the US are important components in this strategy.