As the Government began their annnual budget conference, Prime Minister Jens Stoltenberg said he is pleased with the development of the Norwegian economy, but sees challenges ahead in the work to form the budget for 2014.
The Prime Minister points to the fact that the nation's economy is divided in two, with the oil industry performing well, while for example the wood-processing industry is facing problems.
A fresh analysis by Statistics Norway (SSB) states that activity growth in the Norwegian economy fell towards the end of 2012 and is expected to show a moderate development going forward. In the short term, domestic demand will stimulate growth. Internationally, the development is expected to be even weaker this year than last.
SSB says their projection of economic trends in the years ahead is slightly more negative than previously. According to the Labour Force Survey, unemployment increased towards the end of 2012, and growth in mainland Norway’s GDP in the fourth quarter was lower than the trend growth despite adjustments for random events in the form of lower growth in power production. However, growth is expected to increase again slightly in 2013 and surpass trend growth.
Wage negotiations between Norway’s confederation of trade unions LO and the national employers’ organization NHO were getting underway this week.
SSB had a warning also to them: Following several years of relatively high wage growth, a strong krone and weak demand, various export-oriented industries in the manufacturing sector are now struggling with profitability. Combined with a slightly less tight labour market, this could mean a further fall in wage growth from last year’s 4.0 per cent.
The high growth in households’ real incomes is expected to continue, but higher interest rates will eventually curb the development. A considerable share of household incomes is saved, but the ratio of savings to income is likely to fall slightly in the years ahead. A clear growth in consumption is therefore expected going forward, SSB predicts.
(NRK/Press release)
The International Monetary Fund (IMF) has presented its views on the Norwegian economy and Norwegian economic policy, and concludes that the Norwegian economy continues to perform well.(Photo: Finance Minister Sigbjørn Johnsen)..
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The Executive Board of the Norwegian Central Bank (Norges Bank) has decided to keep the key policy rate unchanged, at 1.5 per cent. The record low key policy rate has remained unchanged since March 14th last year.
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Foreign and domestic demand, excluding petroleum activities, grew modestly in the 4th quarter of 2012. The gross domestic product (GDP) of mainland Norway was up 0.3 per cent in the 4th quarter.
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