Norwegian growth jumbo class – Aftenposten

The simple explanation is “oil price shock” last fall. Oil prices have fallen 45 percent since September last year.

For oil country Norway means deep cuts in oil investments and layoffs by the thousands in the industry.

euro means cheaper oil lower energy costs. It stimulates economic growth.

Greece is ahead of Norway

Even ailing Greece gets higher percentage growth than Norway, estimates the IMF.

But the starting point for the two countries two extremes Europe is also very different:

• After six years of economic recession is a quarter of the Greek economy razed away, unemployment is over 25 percent and government debt and the debt burden increases.
• Oil-rich Norway has low unemployment and “money in the bank” with the Oil Fund has grown to over 7000 billion.

At the bottom of table

Only Italy, Finland, Cyprus and Switzerland get a lower growth than Norway this year, according to new IMF projections.

IMF projections for the Norwegian economy is in line with downgraded forecasts earlier this spring from Statistics Norway (1.1 percent growth this year) and Norges Bank (1.5 percent growth).

Last fall IMF estimated growth in the Norwegian economy this year at 1.9 percent .

Since “oil price shock” in November last year, when the oil exporting countries of OPEC (Organization of Petroleum Exporting Countries) said no to cut oil production to halt the fall in oil prices and oil prices plunged to below $ 40 a barrel, IMF has revised its forecasts.

Unchanged global forecasting

But the IMF maintains its earlier estimate of a continued solid growth in the world economy this year and next year.

Monetary Fund estimates that global growth will increase from 3.4 last year to 3.5 percent this year and 3.8 percent next year.

But the growth is uneven. It is on the rise in the rich industrialized countries, while it is lower in emerging economies such as China.

– The legacy of both the financial crisis and the euro crisis – weak banks and high debt levels in the public sector, businesses and households – still adds a damper on consumption and growth in some countries. Low growth in turn leads to that debt reduction is a slow process, says IMF chief economist Olivier Blanchard.

Alongside growth economies in the world, the US has been a locomotive in the new upturn in the global economy.

IMF have revised nevertheless its growth forecasts for the US economy this year by 0.5 percentage points to 3.1 per cent both this year and next year.

Growth in China – another “engine” in the world economy – are lower. IMF maintains its earlier estimate that it will fall from 7.4 percent last year to 6.8 percent this year and 6.3 percent next year.

This is a desired development in the sense that Chinese authorities have tightened on investment, especially in the real estate industry. Analysts have long warned of a looming debt bubble that can burst in the Chinese property market.

Energy Nation Russia is in a class worst off. IMF estimates an economic decline of 3.8 percent this year and 1.1 percent in 2016. Last year the country had a slight growth of 0.6 percent.

Euroland crabs upward

The turnaround in the economy of the 19 euro countries in the EU happened in the fourth quarter this year. The recovery has continued into the first months of this year.

There are three main explanations:

• Cheaper oil means lower energy costs for businesses and households.
• The decision by the European Central Bank (ECB) to buy up government debt in the indebted euro countries, has created new optimism and willingness to invest.
• Lower euro exchange rate measured against other major currencies has European exports cheaper.

But developments in the euro area is very uneven between regions.

The IMF believes there is a need for many action on multiple fronts to halt the fall in prices and prevent an economic stagnation in the eurozone.

Published: 14.apr. 2015 3:10 p.m.