COPENHAGEN, Oct. 11 (Xinhua) -- The Danish economy is set to experience a downturn in the next few years, as a result of high energy prices and galloping inflation, according to a report by the Danish Economic Council released on Tuesday.

The country's labor market is also predicted to shrink by 100,000 employees over the next 14 months, the report said.

The four top economists who preside over the Economic Council have predicted a 0.2 percent decline in Gross Domestic Product (GDP) in 2023, followed by a 0.6 percent increase in 2024.

"The forecast implies (...) a standstill in the Danish economy for three years, so that GDP at the end of 2024 will be roughly at the same level as at the end of 2021," the report says.

The gloomy forecast comes after the Danish labor market saw euphoric growth of almost 150,000 jobs in the aftermath of the COVID-19 pandemic.

According to Statistics Denmark, there were just over 2,950,000 people in the labor market in Denmark in July 2022, while approximately 78,400 people were unemployed.

The Economic Council said that the reasons for the decline in employment include the prospect of a worsening economic situation as a result of the Russia-Ukraine conflict, sky-high inflation, and rapidly rising interest rates.

"The decline must be expected to occur in a number of the most cyclically sensitive industries, which have also experienced the greatest pressure in the past year," said the report.

The conflict in Ukraine and the resultant energy crisis could hit the Danish economy even harder than predicted, the experts said.

"The experience from the financial crisis in 2008 shows that setbacks can happen even very suddenly, when pessimism and uncertainty first take hold in households and companies, especially when the unrest spreads to the financial markets," said the report. Enditem

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