Norwegian real GDP growth will slow significantly in ----, to -.- from -.- in ----. However, the economy should be able to avoid a significant contraction due to several factors including an expected rebound in oil prices by the end of ----. ...We forecast a rebound to -.- growth in ----, with most categories of GDP by expenditure picking up by that stage. While we emphasise that the economy s diversification away from hydrocarbons will be painful (see Slow Transition Away From Oil , November - ----), we give several reasons for cautious optimism: � Our Oil & Gas team forecasts front-month Brent crude to average USD--.-- per barrel (/bbl) in ----, with a rise in prices to between USD-----/bbl in H---. This implies a ----- increase in oil prices from January ---- levels by the end of the year, and importantly, marks a stabilisation in prices that will help anchor Norwegian confidence. ...The government has begun selling foreign reserves and buying NOK---mn per day in February to plug the budget deficit, almost double the NOK---mn in the previous month, in a sign that the government may be using an increasing amount of available funds to meet budgetary spending commitments.
...Source: BMI � The export sector has held up much better than expected, due in part to significant weakness in the krone, but also to an improving economic outlook for the eurozone, Norway s most important single trading partner. ...Although the weak krona has helped the export sector, higher import prices are being passed onto consumers, hurting real retail sales. Overall, though, real disposable income rose by -.- in ---- and while that rate of growth will decline in ---- as wages moderate, households have ample savings built up over the good years to smooth out consumption in the leaner years ahead. While there are some reasons to hold a reasonably optimistic appraisal of the Norwegian economy at this difficult time, we - Business Monitor International Ltd www.bmiresearch.com ...Overall, though, real disposable income rose by -.- in ---- and while that rate of growth will decline in ---- as wages moderate, households have ample savings built up over the good years to smooth out consumption in the leaner years ahead. While there are some reasons to hold a reasonably optimistic appraisal of the Norwegian economy at this difficult time, we - Business Monitor International Ltd www.bmiresearch.com
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