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Wednesday, April 17, 2024

Harder times don’t halt holidays

Norwegians aren’t letting an economic downturn get in the way of their summer holidays. New figures from employers’ association Virke, which has many members in the tourism industry, show that average household travel budgets are up 23 percent from last year, and one local bank economist is sounding an alarm.

When Norwegians are on holiday, one of their top priorities is to spend time with friends and family. PHOTO: Views and News
Local economists are surprised Norwegians still plan to spend so much money on summer holidays, and urge them to consider less lavish holidays closer to home, maybe like here on a boat to islands in the Oslo Fjord. PHOTO:

“It’s during economic slumps that folks usually cut back on things they’d like to do, to put a priority on securing their economy,” Silje Sandmæel, an  economist specializing in consumer spending at Norway’s biggest bank, DNB, told Norwegian Broadcasting (NRK). “I’m astonished that people are still planning to spend a lot on holidays.”

According to figures compiled by Virke, more Norwegians have already booked their summer holidays in January and so far in February than they did last year by this time. One of four Norwegians is spending a winter holiday abroad this year.

Fully 92 percent of tour companies and 61 percent of travel agencies polled by Virke reported higher revenues last year than in 2014. They’re expecting revenues to increase this year as well. Norwegian families on average plan to spend NOK 45,800 on their holidays this year, up 23 percent from last year and 3.5 percent from the record year in 2014.

‘Sticking our heads in the sand’
Sandmæl is concerned, given rising unemployment in Norway. “I’m afraid that many people will end up in economic difficulties,” she told NRK. “We must remember that household debt is high in Norway, many are in the danger zone. If they lose their jobs, it won’t be easy if they’ve spent all their savings on their holidays.”

Sandmæl acknowledged that holidays and travel always rank high when Norwegians list what they want to spend their money on. “But they need to budget for them,” she cautioned. “Many people have become used to having a solid economy for a long time. We’re sticking our heads in the sand like an ostrich when it comes to our personal economy, and think others will struggle, but not them. That’s unwise.”

With all indications showing low wage growth and little if any pay hikes this year, other economists are also sending out warning signals for Norwegian consumers accustomed to good times. Magne Gundersen, an economist at Sparebank1, urged caution.

“For those who are worried about losing their jobs, are already laid off or face other economic uncertainty, this is not the time to be spending NOK 150,000 on the great American holiday,” Gundersen told NRK. “A holiday closer to home can be a good alternative, especially given the weak krone.”

Both he and Sandmæl said the majority of Norwegians can probably still afford a summer holiday, with Gundersen noting that it’s “important folks spend some money, also in a downturn, to stimulate the econmy.” They should all be budget-conscious, though, he added.

“Too many live a bit too much now, and don’t plan for the future,” Sandmæl said. DNB has earlier reported that only one of four Norwegians has a firm household budget. Berglund



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