Trump makes it harder to predict the future, but we have to try

SSB forecasts a decline in the world economy and a flattening of the Norwegian economy over the next three years. An unpredictable US president can still change the picture.

– It can be much worse than the picture we outline, says researcher Roger Hammersland at Statistics Norway (SSB) to NTB.

On Thursday, SSB presented its forecasts for developments in the Norwegian economy and the world economy until 2022.

Here, researchers predict that the upturn in Norway, which has been around since the beginning of 2017, is likely to be over by next year. Instead, they expect a flattening of growth in the years ahead. The reasons are, among other things, lower oil investments, that they expect a neutral fiscal policy and that business investment is expected to decline.

Norway is also affected by an international economic downturn. Hammersland is aware that what Donald Trump is doing next time could have a major impact on the world economy.

Threatened with 100 percent tariff
– Trump makes it more difficult to predict the future, but we have to try. Our job is to look into the crystal ball, and when we get as much information as possible and structure it, I have faith that we can say something about the future, says Hammersland.

He points to Trump’s threats to impose 100 percent tariffs on French goods, and increased tariffs on European cars and car parts, as factors that could help further the downturn in the world economy.

– Still, the outcome of the US-China trade talks is perhaps the most important. If the conflict is escalated, it is difficult for me to imagine that we will not have an even greater global recession, he says, and continue:

– On the other hand, we can improve the situation if Trump downsizes the conflict and reverses tariffs on Chinese products. But as it seems today, this is unlikely.

The climate focus can be growth-dampening
At the same time, SSB researcher Hammersland believes that attention to climate change can affect both the Norwegian and international economy.

– The climate focus can be growth-dampening, and that may be what it takes. After all, growth in the economy has been the driver of the pollution, and when you put restrictions on the pollution, it can have clear growth effects, Hammersland says, and continues:

– This is where the Norwegian economy comes in, and the question of why the krone is so weak. One hypothesis here is that the krone is an oil currency, so when oil production is heading towards sunset, it is not positive for the Norwegian currency.

Three extra working days will result in higher GDP
In the forecasts for 2020, Statistics Norway forecasts a growth in gross domestic product for mainland Norway of 2.4 per cent.

Some of the reason for the growth can be attributed to three more working days next year, compared with this year.

– We estimate that approximately 0.5 percentage point of the 2.4% growth in GDP in mainland Norway can be attributed to the increase in the number of working days, Statistics Norway writes in the report on cyclical trends.