Record-high current account surplus

• In August the current account surplus was DKK15.4bn, which is a record-high surplus. Over the past 12 months the accumulated surplus was DKK119bn.

• The increase in August was due to a doubling of the service trade balance surplus.

• The increasing current account surplus effectively raises the bar for how much outflow is allowed without putting pressure on DKK.

Statistics Denmark has just released the balance of payment figures for August. It shows a record-high monthly surplus on the current account. The surplus reached DKK15.4bn in August, thereby topping the previous high set in June last year. The accumulated surplus over the past 12 months reached DKK119bn in August, which is also a historical high. The increase in the current account surplus in August was due to a large increase in the trade balance, which was due to a doubling of the service trade balance surplus compared to July, which brings the total trade balance surplus to DKK11.7bn.

Denmark has consistently run a current account surplus since the late 1990s and since the onset of the economic crisis the surplus has climbed higher. In the second quarter the annual current account surplus was 6.4% of GDP, which is more than five times the surplus in the third quarter of 2007 – before the crisis. Back then the surplus was 1.2% of GDP. We expect the large current account surplus to persist in the coming years. Hence, we forecast a current account surplus of 5.1% of GDP in 2013 and 5.2% of GDP in 2014.The large current account surplus has been one of the main pillars making Danish assets a safe haven in the financial markets during the euro debt crisis. Furthermore, the increasing current account surplus effectively raises the bar for how much outflow is allowed without putting pressure on DKK.