Norway's central bank set for rate cut amid slow growth
OSLO: The Norwegian economy, once one of Europe's brightest, ground to a halt in late 2015, leaving full-year growth at its lowest in six years and consumer confidence at its lowest in 24 years, strengthening the case for central bank rate cuts. As western Europe's top oil and gas producer, Norway has been hit by the 70 percent fall in crude prices since mid-2014. Unemployment has reached a 10-year high of 4.6 percent, low by global standards but far above the 3.2 percent seen in mid-2014.
The weaker crown, down almost 20 percent since mid-2014 on a tradeweighted basis because to lower crude prices, has been key to making non-oil exporters more competitive, but not enough to boost the overall economy. Growth in mainland Norway, which excludes volatile oil and shipping, reached 0.1 percent in the fourth quarter. Third-quarter figures were revised to no growth from the preliminary 0.2 percent in November, Statistic Norway said on Tuesday. For 2015, mainland growth fell to 1.0 percent, the lowest since the financial crisis of 2009 and below the central bank's forecast of 1.4 percent. Still, the minority government leading Norway believes the country can weather the downturn, even though oil prices have fallen more than expected and China's economy is slowing.
With a weakening currency, an $800 billion wealth fund and the potential for more reductions in interest rates, Norway can gradually diversify from oil and gas output, which makes up more than a fifth of GDP, Prime Minister Erna Solberg told Reuters on Monday.