Oil price drop has brought less unemployment than feared

Oil priceOil. Photo: Pixabay

Despite a sharp fall in oil prices in recent years, unemployment has increased only moderately. Recent forecasts suggest that the unemployment peak may already be behind us.

Chief Analyst, Erik Bruce of Nordea, told Dagens Næringsliv that he would hardly have predicted that unemployment would only rise to 3.4 percent if he’d been told three years ago that oil prices would fall by 70 percent.

‘Before the price drop, if we were asked “when will it go horribly wrong in Norway?” We answered, “when the price of oil collapses”’ said Bruce.

He added ‘all expectations have been exceeded in sectors not oil-related. When the slump began, unemployment was at 2.7 percent. It may have topped-out at 3.4 per cent in January this year. Nav don’t believe unemployment will continue to rise.’

‘The trend in registered unemployment so far this year has clearly been better than projected in our previous forecast, and therefore we must revise it down for both 2016 and 2017,’ wrote the agency in a report last week.

‘Firstly, we estimate it will go less badly for oil-related activities. Secondly, we envisage higher housing investment, a weak exchange-rate and low interest rates, which is positive for traditional industry and tourism’, said Labor and Welfare Director Sigrun Vågeng.


Source: NTB scanpix / Norway Today