Denmark's industrialized market economy depends on imported raw materials and foreign trade. Within the European Union, Denmark advocates a liberal trade policy. Its standard of living is among the highest in the world, and the Danes devote about 1% of the gross national product (GNP) towards foreign aid in less developed countries. In 2002, Denmark devoted 0.33% of GNP towards peace and stability interests, including covering pre-asylum costs for refugees, and for environmental purposes in central and Eastern Europe and in developing countries.
Denmark is a net exporter of food and energy. Its principal exports are machinery, instruments, and food products. The United States is Denmark's largest non-European trading partner, accounting for about 6% of total Danish merchandise trade. Aircraft, computers, machinery, and instruments are among the major U.S. exports to Denmark. Among major Danish exports to the United States are industrial machinery, chemical products, furniture, pharmaceuticals, canned ham and pork, windmills, and plastic toy blocks (Lego). In addition, Denmark has a significant services trade with the U.S., a major share of it stemming from Danish-controlled ships engaged in container traffic to and from the United States (notably by Maersk-SeaLand). There are some 350 U.S.-owned companies in Denmark.
The Danish economy is fundamentally strong. Since the mid-1990s, economic growth rates have averaged close to 3%, the formerly high official unemployment rate stands at 5.1%, and public finances have been in surplus. Except for one year--1998--Denmark since 1989 has had comfortable balance-of-payments current account surpluses, in 2002 corresponding to 2.9% of GDP. The former Social Democratic-led government coalition lowered marginal income tax rates but at the same time reduced tax deductions, increased environmental taxes, and introduced a series of user fees, thus increasing overall revenues. Under the tax reform plan agreed upon by the government and the Danish People's Party on March 31, 2003, taxpayers received tax relief in 2004, albeit at a lesser rate than the government proposed originally. Denmark has maintained a stable currency policy since the early 1980s, formerly with the krone linked to the deutschmark and since January 1, 1999, to the euro. Denmark meets, and even exceeds, the economic convergence criteria for participating in the third phase (a common European currency--the euro) of the European Monetary Union (EMU). Although a referendum on EMU participation held on September 28, 2000 resulted in a firm "no" and Denmark, therefore, has not yet adopted the euro, opinion polls show support for EMU membership now exceeds 60%.
Danes are generally proud of their welfare safety net, which ensures that all Danes receive basic health care and need not fear real poverty. However, at present the number of working-age Danes living mostly on government transfer payments counts more than 800,000 persons (roughly 23% of the working-age population). Although this number has been reduced in recent years, the heavy load of government transfer payments burdens other parts of the system. Health care, other than for acute problems, and care for the elderly and children have particularly suffered, while taxes remain at a painful level. More than one-fourth of the labor force is employed in the public sector.
GDP at current prices: $243.4 billion
GDP Growth Rate (Real): 2.4%
Per Capita GDP, current prices: $40.650
Government Spending (%/GDP): 54.9%
Unemployment Rate (%/Labor Force): 5.1%
Average Dollar Exchange Rate*: (DKK) 6.12
Trade with United States, 2005 (1,000 US$):
U.S. export to Denmark: 1,913,307
U.S. import from: Denmark: 5,142,559