Economy keeps humming along
February 5, 2013
The Oslo Stock Exchange is off to a good start this year, Norway’s currency remains super-strong, unemployment and interest rates are low and now a top labour and welfare official predicts that 100,000 more people will be employed in Norway by the end of next year. Earlier predictions of an economic downturn have been cancelled, announced Norwegian Broadcasting (NRK) on Tuesday.
Ominous expectations have been aired for months that the financial crisis elsewhere in Europe would eventually put a damper on Norway’s long-booming, oil-fueled economy. Prime Minister Jens Stoltenberg has urged caution as has his finance minister, Sigbjørn Johnsen, while various economists have warned of a crack in the real estate market and a slowdown in exports.
There were worries when retail figures for December showed a slight but surprising decline in Christmas sales, and it was just last month that DNB Markets forecast higher unemployment, poorer wage pacts and a decline in housing prices. Kjersti Haugland, a senior economist at the securities division of Norway’s biggest bank, also predicted a fall in oil and housing investments.
Meanwhile, though, construction has been booming, surveys have shown that exporters remain optimistic and hopes have been high for an ongoing boom in stock prices. Major stock market players have told newspaper Dagens Næringsliv (DN) that they think 2013 will be a “fantastic” year for the stock market because of rising faith in the resiliency of the global economy.
NAV now optimistic
Now Joakim Lystad, director of labour and welfare at the state employment and welfare agency NAV, is voicing optimism as well. He told DN on Tuesday that despite the major problems in Europe, with economic crisis and high unemployment, NAV has high expectations for ongoing growth in the labour market in Norway.
New prognoses from NAV show that the average number of people registered as unemployed will drop from 65,700 (2.5 percent of the workforce) in 2012 to 64,000 (2.4 percent) this year. Next year, unemployment will decline further to 2.2 percent, according to NAV.
Lystad confirmed that the new prognoses are “clearly more positive” than those issued earlier. “We expect that 100,000 more people will be employed by the end of 2014 than today,” Lystad told DN. “This is a clear shift. Throughout 2012 we predicted that unemployment rates would remain stable. Now we think they will be stable this year and decline in 2014.”
He said the financial crises in the US and Europe already have had an effect on Norway’s economy and that now there are signs of improvement. “We expect that economic development outside Norway will be weak, but that there will be improvement in 2014,” Lystad said. Meanwhile, he and his colleagues at NAV are already seeing growth in Norway’s oil-related industry, in construction and private consumption.
Labour immigration to remain high
NAV officials expect continued high rates of labour immigration to Norway. “With rising unemployment in other countries, there’s reason to believe that Norway will be an attractive country in which to seek work,” Lystad told DN. He expects that the greatest job growth will occur in oil-related companies, construction and health care.
Record low interest rates have also lowered household costs, and even though Norway’s central bank has warned that rates will rise this year, investors don’t seem to believe it. They note that Norway’s currency, the krone, remains extremely strong against other currencies, threatening imports and making it unlikely the central bank will effectively boost it even further with a rate hike.
As for the surprise dip in Christmas sales, some industry trade groups explained it by saying that many Norwegians already have so many material things that they gave each other gifts of “experiences” instead, like fancy dinners out or gift certificates for spa treatments. Luxury car sales also remain high in Norway and local newspaper Aftenposten reported a boom in expensive, brand-name winter jackets on school playgrounds last month. One boy put a spin of Norwegian practicality, though, on his own high-priced garment: “Jackets can be expensive because it’s important that they’re warm, and they should last a long time.”
Views and News from Norway/Nina Berglund
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