Norway
The bottom is reached for the Norwegian economy, according to DNB Markets. Still waiting brokerage further rise in unemployment – and the largest decline in real wages since 1981.
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on Wednesday morning adds DNB Markets presented its semi-annual report with fresh forecasts for developments in the Norwegian and global economy. After several quarters of stagnation in the mainland economy, think brokerage that bottomed out at home.
DNB Markets pointing especially on two factors behind this: Slower decline in oil investment and increased housing investment.
– this is not something violently cover, but there are thus several factors that contribute to that we now think the slightly higher growth, says macro economist Jeanette Power Couplers DNB Markets to DN.
See overview of the projections at the bottom of the matter!
Hydro reduces unemployment estimates
Growth picture presented in Wednesday’s report is quite similar to what DNB Markets presented in May. Despite slight increase waiting economists continued rise in unemployment. Estimates are admittedly revised down somewhat.
– Employment is still very weak, but the unemployment rate does not increase as much as previously envisaged. That’s partly because the labor supply falls, which among other things with labor to make, says Power Couplers.
She believes the rise in unemployment, which primarily occurred in western Norway, also dampened by declining productivity growth.
– it is possible that rather than denounce the people, let you do that either go beyond productivity. Therefore, we believe it also takes time before unemployment falls again when growth picks up, says the economist.
Viewing decline in real wages
The brokerage has since the last report not touched wage estimates, but also upscale now estimates of inflation. This happens after figures from Statistics Norway (SSB) last week showed a surprisingly strong increase inflation in July.
DNB Markets believe that households thus be done on it that real wages may fall by more than one percent year, which is the weakest performance since 1981. This will be reflected in somewhat lower private consumption, according to the brokerage.
– it goes against the decline in real wages of 1.2 percent in 2016 from last year, says Power ebb.
Cancelling rate cuts
at the same time canceled the previously announced rate cuts from Norges Bank in September.
Norges Bank will publish its next interest rate decision on September 22. In June announced that the central bank policy rate would be cut to a record low 0.25 percent – assuming the economy evolved as expected.
– Now we believe that the policy rate will remain at the current level. There are several reasons for this, including higher inflation than expected. In addition, house prices very strong and perhaps stronger than Norges Bank assumed in late June, says Power Couplers.
DNB Markets expect house prices to continue to rise in coming years. The already low interest rates are a major cause of this.
– House price inflation is likely to remain high this year, in spite of higher unemployment and lower income growth. Very low interest rates and interest rate expectations, stimulate demand for housing, writes brokerage in the report.
Hydro reduces unemployment estimates
In summer, there have been several Norwegian figures that have been cited as strong. In addition showed SSB’s business tendency survey that Norwegian industrial managers report a leveling off in overall production, after five quarters of decline.
Economists DNB Markets emphasizes Wednesday that the drop in oil investment is the single most important factor behind the weak trend in the Norwegian economy .
the fall in oil investments, partly reflecting the sharp oil price decline since late summer 2014. From levels of well over $ 100 a barrel, the bottom reached in January at around $ 27 a barrel. This has affected the economy in several ways.
– Decline in oil prices and some other commodity prices have weakened revenue for the country and given a weaker krone. The depreciation has gained wide acceptance in inflation and weakened household purchasing power, writes brokerage.
Waiting in oil prices
DNB Markets await today that oil prices will rise, and that the average ends at 65 and 70 barrel respectively in 2017 and 2018.
– the question is not about oil demand will increase over the next ten years, but how much it will increase. Even with a negative outlook on economic growth, a halving of world energy intensity and declining market for oil, there will still be growth of oil demand over the next decade, writes broker house oil analyst Torbjorn Kjus.
– We thus keep our view that oil prices will move in a normalized equilibrium band of between 60 and 80 dollars a barrel by 2018, he writes.
Recent estimates from DNB Markets
| percentage change from previous year | 2015 | 2016 | 2017 | 2018 | 2019 |
| Private consumption | 2.0 | 1.3 | 1.8 | 2.5 | 2.7 |
| Gross domestic product (GDP) for mainland Norway | 1.0 | 0.8 | 1.4 | 1.9 | 2.1 |
| Gross fixed capital – oil business | – 15 | -15 | -10 | 5 | 10 |
| Unemployment rate, LFS | 4.4 | 4.8 | 4.9 | 5.0 | 4.9 |
| Årslønn | 2,8 | 2,5 | 2,8 | 2,8 | 3,0 |
| Consumer prices – CPIATE (kjerneinflasjon) | 2,7 | 3,2 | 2,2 | 1,4 | 1,2 |
| Bruktboligpriser | 7,2 | 7,8 | 7,0 | 4,0 | 3,0 |
DNB Markets` new oil price estimate
| US dollar per barrel | 2015 | 2016 | 2017 | 2018 | 2019 |
| Råoljepris | 53 | 46 | 65 | 70 | 70 |
Source: DNB Markets and Statistics Norway (SSB)
Listen DN podcast in which we discuss the fall in the stock market, the outlook for interest rate cuts and the bottom is reached for the Norwegian economy.
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