Slightly higher economic growth in the future will contribute to the unemployment rate probably peaking by the end of the year. Then unemployment rate will then drop slightly next year, Statistics Norway (SSB) estimates.
On Thursday SSB presented its outlook for the Norwegian and international economy until 2019. They anticipate that Norwegian economy will experience some growth after the sharp downturn after the summer last year.
The unemployment rose sharply from spring 2014 to autumn 2015, but the last six months the increase has leveled out.
– Slightly higher economic growth ahead will help to ensure that the unemployment probably will peak at an annual average of 4.7 percent of the workforce this year, according to the SSB’s forecast.
Lower growth this year
In brief, it is expected that a smaller drop in oil investments, low interest rates, expansionary fiscal policies and increased global growth will gradually accelerate growth in the Norwegian economy.
– In 2015, the GDP of mainland Norway only increased 1.0 per cent, and we expect even lower growth this year, SSB says .
For the oil industry the downturn brings significant negative impulses for virtually all industries and all across the land. However, some industries and some regions are more strongly affected than others. At the same time, SSB analysts points out, that the drop in oil prices along with reduced Norwegian interest rates and interest rate outlook contributed to the sharp depreciation of the krone until January this year. This has in turn contributed to lower costs and improved competitiveness significant for companies who are importing products and services and companies who are selling products and services outside of Norway.
Interest rate decline
As for the interest rates in the coming years, SSB expects that Norges Bank will reduce the already low policy rate of 0.5 percent by a further 0.25 percentage points this fall. For people with mortgages this will mean an annual average that could drop from 3.2 percent last year to just under 2.5 per cent in 2017 and 2018.
– We take for our basis a small increase in base rates in 2019 so that mortgage rates will approach 3 percent in late 2019.
Source: NTB scanpix / Norway Today