The price of Norway’s North Sea crude oil rose over the USD 60 mark on Monday, for the first time since the Corona crisis began. Economists also predict Norwegian households will be stronger when the crisis ends, and interest rate hikes are expected.
Norway’s krone strengthened on Monday after the oil price rise, with one US dollar now costing around NOK 8.5 instead of NOK 8.6 before the weekend. Recent predictions by Nordea Markets of four interest rate rises by the end of 2022 will also likely strengthen the krone. Norway’s central bank has hinted at rate hikes as well, but not any time soon.
Household income in Norway, meanwhile, remains almost surprisingly strong. Despite record-high numbers of unemployed (around 200,000), they’re mostly all receiving at least 60 percent of their income through state welfare benefits, while many others still have secure jobs and haven’t been able to spend money on travel, restaurant visits, entertainment and other luxuries. That’s boosted savings and created pent-up demand for the day when Corona restrictions end.
Economic recovery will be swift, predicted Nordea’s chief economist Kjetil Olsen. “It will go fast to get the economy back,” Olsen told newspaper Dagens Næringsliv (DN). Nordea analyst Dane Cekov agreed. Cekov thinks economic recovery will begin this summer, while Olsen predicts an interest rate hike by Christmas.