Nordea Markets is out with a new economic report.
According to this will probably be 2017 years when it turns up again for the Norwegian economy.
– Growth bottomed
the brokerage takes down its 2016 estimate of growth in mainland GDP to 1.0 percent, from 1.4 percent in December report.
in 2017 eyes economists now 1.6 percent growth, compared 1.7 percent at the previous crossroads.
– We expect that growth in the mainland economy reached bottom in the 2nd half of last year. Oil-related industries will gradually withdraw slightly less down than before, while increasing growth in public demand pulls up. Slowdown in consumption is the main reason that growth this year should not be significantly higher than last year, writes chief analyst Erik Bruce.
– Real wage growth this year will be zero, and in oil-related parts of the country will increase uncertainty help that consumption is holding back. Consumption growth fails, however, not entirely. Lower interest rates and a relatively stable labor market in many parts of the country will contribute, he said.
The oil companies’ plans indicate according to Bruce that petroleum investment will fall sharply this year, but “maybe not quite as fast as in last year. “
– Major ongoing projects and higher oil prices will contribute to the decline slowing further in 2017, he continues, referring to the brokerage house’s estimate of 13 percent and 8 percent drop in oil investments, respectively. 2016, 2017.
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– No rate cut gives crown rally
oil brake, according to Nordea still be so powerful that unemployment will increase somewhat and the key rate will end the year at zero.
Nordea now seeing an unemployment of 4.8 percent at the end of 2016 and 4.9 percent in late 2017.
Furthermore, the expectation therefore that Norway Bank comes three interest rate cuts – each at 0.25 percent – from the current 0.75 percent.
– the interest among our trading partners have fallen and no rate cuts from Norges Bank will crown may appreciate much. The Norges Bank will avoid a situation where growth is weak and unemployment rises, writes Bruce.
– The crown has weakened considerably in recent years, in line with falling oil prices and lower interest rate differential against other countries. With three interest rate cuts from Norges Bank, we see more downside in the interest rate differential, but we think the bottom for oil prices is behind us. Over the next years, we expect oil prices to rise somewhat and we must expect a certain crown strengthening, it added.
Nordea now seeing EURNOK in 9.00 at the end of the current year, and 8.60 one year later.
– Can have negative interest rates
the depreciation in recent years has pushed up underlying inflation.
– as importers revised up prices, inflation will then decline. Wage growth has slowed as a result of rising unemployment and widespread agreement about the need for moderate wage settlements, also means lower inflation. During 2.
half of this year, we expect underlying inflation reaches 2 percent. By the end of 2017 we estimate 1.25 percent, continues chief analyst.
In 2017, Nordea thus inflation far below target.
– We still think it will not trigger further monetary easing form of negative interest rates or quantitative easing. As long as growth is picking up and the increase in unemployment stops, Norges Bank considered low inflation as a temporary consequence of the realignment Norwegian economy is facing.
– The Governor has stressed how important it now is with moderate wage growth. It will mean low inflation. Should the krone appreciate much, new monetary policy measures will be applicable. Then we get negative interest rates in Norway, says Bruce.
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