Suddenly, some signs of pessimism
November 23, 2009
Norway has so far seemed relatively unscathed by the global finance crisis but a new report throws cold water on the country’s economic outlook. Suddenly one in three industrial firms is planning to cut staffing after New Year, and Norwegian business leaders are much more pessimistic than they were last summer.
More than 2,200 companies responded to a survey conducted by Norwegian employers’ association NHO (Næringslivs Handels Organisasjon) , and their answers to questions about their outlook for 2010 were relatively gloomy.
They indicate, according to NHO, that many so-called “experts” have been over-evaluating growth in the Norwegian economy and that the finance crisis “isn’t over yet.”
Nearly 30 percent of the companies said they’re already planning cutbacks during the first quarter, and will lay off or furlough staff. Only 14 percent reported such plans in August, when NHO’s last survey was conducted.
Most of the cuts will come in the construction industry, where 44 percent of firms questioned intend to lay off workers. Export firms also were struggling from a lack of orders and 31 percent of firms in the travel industry planned cuts.
NHO’s economists thinks the cutbacks will lead to a rise in unemployment, from the 95,000 out of work today to 120,000 by the second half of 2010.
Market pessimism is also on the rise, with 26 percent of business leaders questioned saying they expected tougher markets for their goods or services next year. In April only 16 percent were pessimistic about the market outlook, reports Norwegian Broadcasting (NRK).
NHO’s chief economist, Tor Steig, predicts that higher interest rates, lower rates of growth in public spending, reduced investment in the North Sea and a loss of competitiveness will hurt the Norwegian economy.
“2010 will be a problematic year for the Norwegian economy,” said NHO senior economist Dag Aarnes. “It will be more problematic than many others think.”
NHO’s report reveals more pessimism among business leaders than either the state Finance Ministry or the central bank’s outlooks. It comes just days after the Organisation for Co-operation and Development (OECD) predicted that Norway will be among the first countries to emerge from the global finance crisis.