DnB economist predicts weak growth

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The chief economist for Norway’s biggest bank, DnB NOR, predicts growth of only 2 percent for the Norwegian economy next year as the world enters what he called the “5th Act of the Financial Crisis Drama.”

Øystein Dørum, speaking to members of the British-Norwegian Chamber of Commerce (BNCC), (external link) in Oslo Tuesday evening, said he didn’t think he was being “negative,” but rather merely “cautious.”

Even though he predicts several other countries in Europe will see growth rates of as much as 5 percent, including neighboring Sweden, Norway’s economy survived the financial crisis well. It avoided falling into a deep trough, so its recovery will be more modest than those rebuilding from a much lower base, he said.

“Norway lost less, in relative terms,” Dørum said. Government stimulus packages are also winding down and a “neutral” state budget for 2011 won’t spur any unusual growth either. After four consecutive years of growth around 5 percent, Norway’s momentum will taper off.

Dørum said he thinks it will be at least a year-and-a-half before interest rates start moving up and that inflation is expected to remain low. He also predicts low wage growth for several more years.

“We’re not out of the woods yet,” he told members of the BNCC, which organized the event in cooperation with the London School of Economics’ alumni association in Norway.

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