A drop in housing prices and increased unemployment may be the result if the oil investments fall significantly, a new analysis for the Norwegian economy shows. Statistics Norway presented figures on Thursday that support the analysis by Chief Economist Bjørn Roger Wilhelmsen in Nordkinn Asset Management.
If the oil investments decrease significantly in the next couple of years, housing prices in Norway may fall, Statistics Norway has assumed so far.
At the same time, the unemployment rate will increase to 4,5 percent, a level that Norway has not seen since the beginning on the 2000s. Many people will lose their jobs, concludes Wilhelmsen. He presented a risk scenario for the Norwegian economy on Thursday at a seminar at the Norwegian Business School.
"The oil sector's importance has increased a lot the past years. We read about the oil in the media every day, and many people base their living on delivering products and services to the oil industry" Wilhelmsen explains.
The basis for his analysis is that the oil investments will fall significantly from 2015. Consultants, the hotels industry, real estate management, and parts of the mainland industry are examples of business areas that will be affected.
The numbers presented by Statistics Norway on Thursday support several aspects of Wilhelmsen's analysis.
According to Statistics Norway, oil investments will fall considerably in 2015 compared to what is expected in 2014. Whereas the investments for 2014 are expected to end at NOK 231 billion, the oil companies' estimate for 2015 is NOK 182 billion.
Head of Research, Torbjørn Eika in Statistics Norway tells NRK that Norway will face serious consequences if the investments fall. It won't be a catastrophe, but our wealth will not develop in the same way that we have seen the past ten years, Eika explains.
Overall, the agency's most positive predicition for the Norwegian economy in 2015 is that it will grow, but at a moderate pace. Interest rates will stay low and mostly unchanged. Both property investments and property prices are expected to increase in the next three years, by between three and six percent annually.