Norway’s central bank chief Øystein Olsen engaged in what one local commentator dubbed as his own “Game of Krones” on Thursday evening, when he unveiled a relatively gloomy forecast for the Norwegian economy. Olsen stressed that after 15 years of economic upturn and “an exceptionally long summer, winter is now coming,” but it may not drag on.
“It was like an echo from the fantasy series Game of Thrones, where folks with a gloomy outlook say that ‘winter is coming,'” wrote prize-winning commentator Kjetil B Alstadheim in newspaper Dagens Næringsliv (DN), on Friday. “Afterwards they chop off each other’s heads with swords, if they’re not eaten up by a dragon. For Olsen, the dragon is named ‘downturn.'”
And it was predictably Norway’s economic downturn, set off by the dive in oil prices, that Olsen dwelled upon in his annual address before the country’s political, financial, professional and academic elite. He warned again that Norwegian workers must now adjust to several years of small wage increases that won’t improve their purchasing power. And they’re the lucky ones, since many other workers in Norway are likely to face unemployment as more and more companies cut back, especially in the oil and offshore industries.
Olsen, who’s always expressed caution and urged restraint even when the good times were still rolling, has now joined the ranks of those telling Norwegians that the country faces some difficult financial times ahead. He claimed just last month that there was “still no crisis” in Norway, but his remarks Thursday evening were more sombre as he noted how the country is feeling the disadvantages of allowing oil to become such a major force in the Norwegian economy. The current downturn is “painful” for many, Olsen noted, and it will take time to restructure Norway’s economy so that it’s not so reliant on oil.
He did express optimism, though, just as he did last month. He stressed that the state has saved up the equivalent of five annual state budgets in its so-called “oil fund,” where oil revenues have been stashed for years. Norway’s commercial banks have saved up many of their profits from recent years as well, interest rates can still be trimmed a bit to stimulate the economy, and Norway’s weaker krone is a good thing for many of the country’s industries, like tourism, seafood and other export products. Oil reserves are larger than they were a decade ago and gas reserves are even larger, and in demand elsewhere in Europe.
In short, despite his warning that “winter is coming” to the Norwegian economy, Olsen suggested Norwegians have long experience in not only tolerating winter but making sport of it as well. Top politicians, who’ve been denying that Norway is in crisis, were pleased. Prime Minister Erna Solberg, for example, said she thought Olsen held a “good speech with the right focus.” Many local business leaders agreed.
“For many there will be tough times,” Kristin Skogen Lund, head of national employers organization NHO, told newspaper Aftenposten. “At the same time there are industries and regions where things are going well. So it’s a mixed picture.” According to industrialist and investor Jens Ulltveit-Moe, “I think thinks will go quite well, in fact.”
For the full version of the central bank chief’s annual “Economic perspectives” address in English, click here (external link).