More record growth in its fishing and tourism industries, along with more looming oil and gas activity, have made Northern Norway the country’s current driver of economic growth. A new survey also indicates that the north will continue to propel the economy for many months ahead.
“It’s full steam ahead here around the clock,” Adrian Jakobsen, who works at the main fish and seafood terminal in the northern city of Tromsø, told newspaper Dagens Næringsliv (DN). His colleague Tor Rainer Kristoffersen agreed: “It’s hectic and exciting. We’re handling 80 tons of fish an hour.” The ever-growing volume and international consumer demand means that Tromsø’s fish terminal needs to expand once again, and will soon move for the fourth time since 1999, to a bigger, even more modern facility farther north on the island.
Norges Bank, the country’s central bank, released a report last week showing that overall growth of the Norwegian economy is currently the strongest since 2013, the year before oil prices collapsed. Many of the hardest-hit areas much farther south are now recovering, but the growth in the northern region is outpacing everywhere else.
Survey cites increase in activity
An annual survey conducted of around 1,500 companies in the bank’s regional network revealed optimism and growth plans. Their assessment of the past three months showed that for the first time since the oil price dive sent ripple effects throughout the economy, there’s been a “considerable” increase in activity in all seven regions.
Northern Norway is among the regions where the highest growth is expected. “The report confirms that the Norwegian economy is doing a lot better,” Jeanette Strøm Fjære, a macroeconomist at DNB Markets, told DN. “And it’s doing even better than we expected.”
Fjære noted that the central bank’s so-called “production indicator” in the report showed the companies surveyed expecting that growth will return to its strongest level since the fall of 2012. That can translate, she said, into annual growth of around 2.6 percent. That compares to growth of just 0.9 percent last year, the weakest since the finance crisis in 2009.
There were more signs that the downturn in Norway’s oil industry was letting up during the past three months, while the companies reported increased activity in nearly all other sectors. The reports from the 1,500 companies taking part in the survey also have a pattern of meshing well with actual developments in the Norwegian economy.
Interest rates at stake
The report will play a major role in the central bank board’s decision on interest rates later this week. The answers from Norges Bank’s regional network help form the foundation for whether the bank’s key policy rate (currently just 0.5 percent) will be raised, lowered or held steady.
Erik Bruce, chief analyst at Nordea Markets, told DN that the survey shows there’s no need to cut rates further to stimulate economic activity. He thinks the survey rather should make the bank board lean in favour of raising rates, but he doesn’t think that will happen, because of low price growth.
DNB Markets doesn’t see much potential for any rate cut either at the bank board’s last meeting before the summer holidays. The value of the Norwegian krone, meanwhile, strenthened just minutes after the release of the report last week. Investment bankers also expect a burst of new stocklistings on the Oslo Stock Exchange this autumn.