It is better for the Norwegian economy: The bottom is reached, oil prices will continue to rise and the exchange rate may be even stronger. But unemployment will remain stable, says Nordea’s economists.
In Nordea’s macroeconomic report Nordea Economic Outlook, published Thursday, economists in Nordea predict that there will be no new rate cuts from Norges Bank.
– Oil Heavy industries will struggle next year, but the effects of interest rate cuts, the weak kroner and public spending is far from exhausted.
We expect a certain appreciation of the kroner to come, but not enough to threaten the recovery.
As long as the economy is recovering, Norges Bank will hardly be fueling a searing housing market with further interest rate cuts, says chief economist Kjetil Olsen.
– We have the base in the long-term interest rates behind us, and it should rise further in the coming years, says Olsen.
Nordea analysts determine that a sharp drop in oil investments have given sluggish growth in the mainland economy in recent years. It is believed that the decline will slow somewhat over the next year, but the decline nevertheless appears to be larger than analysts envisioned earlier.
The report points out that low interest rates have given more stimulus to the housing market than expected.
While residential construction is at full speed up, also the construction of commercial buildings is to increase. While the top is reached for unemployment, low interest rates and a more subdued inflation contribute to decent consumption growth in the coming years, says Nordea’s economists.
Source: NTB scanpix / Norway Today