The chief economist for the Norwegian national employers’ organization NHO is the latest to issue a sobering outlook that may only cheer anti-oil climate activists like Greta Thunberg: Norway’s economic growth will slow down, Øystein Dørum predicts, mostly because of “much lower growth in oil investments, and then a decline.”
Dørum, who worked many years as chief economist at Norway’s biggest bank before joining NHO, has unleashed the latest round of gloomier prospects for the Norwegian economy. They follow those of state statistics bureau SSB, which also points to how Norway’s currency remains historically weak and how the real estate market is already cooling off.
“We now expect stagnation in business investments next year,” Dørum wrote in his report from NHO (Næringslivets Hovedorganisasjon). “Together with much lower growth in oil investments and then a fall, this will contribute towards pulling down growth in the Norwegian economy in the future.”
Dørum specifically predicts growth in the mainland economy (excluding Norway’s offshore oil industry) to deline to 2.3 percent in 2020 and 1.7 percent in 2021-22. That means unemployment, which is now viewed as having ceased its decline, will likely rise a bit of the next few years.
He noted that feedback from NHO’s member companies around the country is “less optimistic” than it was just three months ago. “There’s a lot that suggests how the chillier winds from outside Norway are now hitting Norwegian employers,” states Dørum.
He stressed, as have others, that the Norwegian economy continues to be “relatively good” despite “a steadily weaker picture around us.” Norway’s economy continued to grow this year, at a rate expected to land at 2.6 percent, with employment growth up 1.8 percent thanks to the addition of around 48,000 jobs over 2018 levels. That’s much better than elsewhere and shows how Norway has bucked the tide of international uncertainty and trade concerns.
Major conflicts between the US and China, however, remain unresolved, multilateral cooperation is under pressure, and all the unrest in the UK and over Brexit will likely damage Norway’s economy no matter which way Thursday’s election goes. Dørum expects “more protectionism and more trade-hindering measures,” resulting in “less economic cooperation between countries and lower potential growth over time.”
Dørum also believes that the oil industry both in Norway and around the world will have to cut back. Even though investment will continue in the short term, not least because of the much-hyped start-up of the Johan Sverdrup oil field, he told newspaper Klassekampen that “I have no doubt what’s best. For me, it’s fundamental that we must solve the climate challenges. The earth must become climate neutral by the middle of this century and Norway must contribute to that.”
He hopes new emissions-cutting contributions will come in the form of commercially exploitable technology, but points out that it’s likely an international restructuring away from oil and gas will mean both lower demand and less profitability in the oil sector.
“You could say that in a world where oil and gas (consumption) will decline, that it’s of course best for our welfare if we can produce as much as possible of it,” Dørum told Klassekampen, “but we’re already one of the world’s wealthiest countries.” Norway, in his view, can’t expect its fortunes to continue to be fueled by oil and gas.
That’s probably music to the ears of the young Swedish climate activist Greta Thunberg who harshly criticized both the Norwegian and Canadian governments this week for continuing to look for and produce more oil.