According to the latest prognosis from Statistics Norway (SSB), the Norwegian economy remains clearly in recession after four quarters of moderate growth in GDP for Mainland Norway.
Increased domestic demand is expected to stimulate growth, but there will not be an appreciable upswing for another two years, SSB states.
The latest GDP figures from the Quarterly National Accounts (QNA) showed slightly lower growth in GDP for Mainland Norway than the trend in the Norwegian economy. The SSB does not expect domestic consumer demand to pick up this autumn and business investment to increase. Weak growth in international demand and reduced growth impulses from fiscal policies will dampen the rise in activity.
Weak international growth combined with reduced Norwegian cost competitiveness will result in a relatively modest rise in exports in the next few years. Exports of traditional goods are not expected to return to their 2008 levels until 2012, SSB analysts believe.
They go on to say that prospects of very low interest rates internationally, moderate growth in the Norwegian economy and low inflation underpin our estimation that the key interest rates will remain unchanged until the summer of 2011. We anticipate a gradual increase in the money market rate from the second half of next year, to reach 5 per cent at the end of 2013.
Four quarters of high growth in household consumption were followed by a small fall in the second quarter. The SSB analysts consider that this was due to special circumstances, and that increased home equity, low interest rates and higher incomes will promote growth in the time ahead. Consumer spending is expected to increase by 3.3 per cent this year and then grow by nearly 4 per cent per annum. This is combined with a moderate fall in domestic savings, which will nonetheless comprise 5 per cent of disposable income in 2013.
Adjusted for normal seasonal variations, Norwegian unemployment as a proportion of the labour force was 3.5 per cent for May-July this year, an increase of 1.2 percentage points from the level in February-April 2008. For next year, we anticipate that growth in activity will contribute to increased employment, but that the labour force will rise somewhat more. The SSB estimate that the unemployment rate will be up to 3.8 per cent in 2012 and will then fall.
(Press release)
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