24383
Norway Faces Growing Economic Uncertainty
World Economy

Norway Faces Growing Economic Uncertainty

Norwegian unemployment jumped to a 10-year high in July, while the prime minister acknowledged that the Nordic oil producer faced mounting problems caused by low crude prices and growing global economic uncertainty.
The May to July three-month jobless rate hit 4.5%, up from 4.3% in the period from April to June, Statistics Norway said on Wednesday. The figure was above all forecasts in a Reuters poll of seven economists, who on average had predicted that unemployment would stay unchanged.
“The Norwegian economy is not in a crisis, but we have challenges and they are larger than we’ve seen until recently,” Prime Minister Erna Solberg told a news conference at the start of a two-day meeting with her cabinet ministers to plan the fiscal budget for 2016.
“These are turbulent times with global economic uncertainty and the Norwegian economy is impacted by that and by the drop in oil prices,” she added.
The country’s crown currency weakened following Solberg’s comments and the unemployment data, trading at around 9.50 to the euro against 9.46 earlier.
The Norwegian central bank has cut rates twice in the last nine months and has said there is a 60-70% chance of another cut in September.
“Unemployment is rising more quickly than Norges Bank had anticipated and this definitely reinforces expectations of a September cut,” Handelsbanken economist Knut Anton Mork said.
North Sea oil prices have dropped from more than $100 per barrel in mid-2014 to just $43 on Wednesday, hitting investments on Norway’s continental shelf and pushing unemployment up by more than a third in the same period.
On a trade weighted basis the crown has dropped by 18% in the same period, helping traditional non-oil industries, the prime minister said.
“We must make sure not to lose the positive buffers, among them the fact that the crown currency has weakened considerably, which has given a boost to tourism and to other (non-oil) export industries,” Solberg added.
A key factor that could make the central bank hesitate on rates is the currency, which is now weaker than it had expected.
“It is significantly weaker than Norges Bank’s forecast, which could point in the direction of unchanged rates ... but we still believe in a cut in September,” Nordea Markets economist Joachim Bernhardsen said.

Short URL : https://goo.gl/nxbILh
  1. https://goo.gl/yq7Z2I
  • https://goo.gl/FVz0bW

You can also read ...

ADB Forecasts India Growth at 7.3 Percent
The Asian Development Bank expects India’s growth to pick up...
Dow futures dropped more than 100 points in early trading, as traders returned from the long holiday  weekend to face fresh selling pressure for US stocks.
A six-day rebound in world stocks began to splutter on Tuesday...
Ghana Told to Cut High Agro Imports
The World Bank country director for Ghana, Henry Kerali, has...
Chinese ironworks are increasingly  using Australian ore, which has  a high iron content.
Global stock markets are down from their recent peaks and...
London-based Capital Economics expects the German economy to expand by 2.7% this year. This would be above the government’s  more conservative forecast of 2.4%.
The German economy is expected to improve in the next six...
Indonesia Criticizes Trump’s Protectionist Policies
Indonesia is foregoing billions of dollars on offer from...
Goldman Raises Red Flag Over US Gov’t Spending
US fiscal policy is headed for “uncharted territory.” That’s...
File picture of truckers in Buenos Aires during a demonstration last summer against the policies of Mauricio Macri.
The Argentine economy grew “close to 2.8%” last year, Guido...

Trending

Googleplus