Norway’s oil-fuelled economy has been holding up better than most countries’, but some top executives are getting increasingly worried. “Prospects have grown dramatically worse in the last quarter,” says the outgoing CEO of Norsk Hydro, one of Norway’s biggest companies.
Eivind Reiten, who announced Monday that he was resigning after eight years at the helm of Hydro, told newspaper Dagens Næringsliv that 2009 is going to be difficult year. He noted that the bottom fell out of the global raw materials market at the end of the year, as prices plummeted for products like Hydro’s aluminum.
Fear of this year
Prices have also fallen sharply for oil, while freight rates for Norway’s important shipping industry have plunged. Bulker rates are down as much as 90 percent from last summer.
“Norwegian business leaders view 2009 with fear,” said senior adviser Roy Eskild Banken of analysis firm Perduco, which calculates a business cycle barometer for Dagens Næringsliv. It’s based on a survey of 2,000 business leaders and measures expectations for hiring, profitability and revenues during the next 12 months.
The barometer had been indicating reduced optimism for the past six quarters, with the past three months showing the most dramatic rise in pessimism. The barometer’s index stood at 51.4 points a year ago. It fell to 32.4 during the third quarter of 2008 and now stands at a lowly 7.3.
“I never would have guessed it could fall so much,” said Harald Magnus Andreassen, chief economist for First Securities in Oslo.
There are some bright spots in Norway’s winter darkness, though. The large retailing operation run by the Reitan family of Trondheim saw revenues rise 20 percent during the fourth quarter and the Reitan Group (Reitangruppen) plans to open 25 new REMA 1000 grocery stores this year. The stores are billed as discount operations in the high-priced Norwegian market.
Another discount housewares chain in Norway, Nille, also reported record growth in November and December.