The investment banking arm of Norway’s biggest bank has reported a much brighter economic outlook for the country than that described by politicians trying to oust the conservative government. DNB Markets believes the oil industry crisis is letting up, unemployment rates are declining and gross national product is on the rise.
The outlook is brighter than it’s been for several years, reports DNB Markets. That’s in sharp contrast to the gloomy outlook described by Labour Party leader Jonas Gahr Støre as he opened the party’s annual national meeting on Thursday. He gave the government no credit for leading Norway out of its worst economic setback in years, when oil prices collapsed in 2014, and complained that unemployment remains a major problem.
‘Returning to normal’
Not so, according to the economists at DNB, which ironically is led by a chief executive from the Labour Party itself, Rune Bjerke. DNB Markets believes the Norwegian economy is “returning to normal,” which amounts to robust by most international standards.
“We expect that the brakes on the oil industry will disappear, while financial policy will become less expansive and homebuilding (currently in the midst of its biggest boom in more than 30 years) will slack off,” Kjersti Haugland, chief economist at DNB Markets, wrote in its latest quarterly report released Thursday.
“Inflation will decline further and the krone will gradually strengthen,” Haugland continued. “Optimism is on its way back.”
Latest optimistic prognosis
DNB’s analysis is in line with several other recent prognoses in recent months. There are clear signs of economic improvement in the areas that most often are leading indicators. DNB Markets predicts that Norway’s mainland GNP will grow by 1.6 percent year and 1.7 percent next year.
The DNB economists also predicted that the fall in oil investments will ease and hit bottom next year, and that oil prices will rise to around USD 65 a barrel this year and by another USD 5 next year.
DNB Markets also believes that unemploment has topped out and will continue to fall, to 4.4 percent this year and 4.2 next year.