nils bernstein : recent economic and financial developments in denmark speech by mr nils bernstein, governor of the national bank of denmark, at the annual meeting of the association of danish mortgage banks, copenhagen, 23 april 2009. * * * thank you for the invitation to speak here today. at last year's meeting, i began by saying that economic predictions should always be taken with a grain of salt. the same applies this year. today's cyclical picture is a great deal gloomier than i – or others, for that matter – predicted a year ago. expectations of global growth are being adjusted downwards all the time. at the moment, growth estimates come and go. the latest international forecasts expect output in the industrialised countries to drop by 4 per cent this year. major exporting countries like germany and japan are hit especially hard ; a decrease in output by more than 5 per cent is foreseen. in that case, the setback will be of a magnitude not seen for a long time. the current outlook is gloomy. but for some time the most pessimistic predictions have tended to stick most. the global political willingness to address the crisis is one encouraging aspect. there is no universal agreement, but so far the world has managed to keep tendencies to profit at the expense of others at bay. let us hope that it continues. the euro plays a major role here. i am not blind to the fact that the currencies of some of denmark's important export markets have depreciated against the euro and thus the krone. this makes life hard for danish exporters, but we will just have to accept it. and it is a reminder of how important it is to keep costs down. the g20 summit in london early this month agreed to expand the lending capacity of international financial institutions, including the imf. in addition, the g20 countries agreed on higher trade credits and a general increase in the foreign - exchange reserves of central banks. all this amounts to astronomical figures. denmark will have to pay its share of the financing of these commitments. a global economic downturn of the magnitude we are witnessing at the moment must necessarily have serious implications for a small open economy like denmark. exports have declined by almost one fifth over the last six months. and the downward trend continues. last year, output fell by more than 1 per cent in denmark, while it rose in most other eu member states. this year, we expect output to decline even more

will ultimately contribute to future prosperity. but experience has taught us that it is a development which needs to be monitored very closely and presupposes a high degree of discipline in economic policy. it requires a great deal from decision - makers in the political system and the supervisory authorities, as well as from those of us who work in central banks. developments in the financial field are creating large opportunities. but it is also important to bear in mind that major, far - reaching changes normally entail risks. in view of these risks, every agent in the financial system needs to act wisely and discerningly. only in this way can the full benefits be drawn from the opportunities that financial developments are providing.