Norway cuts growth forecast

Norway cuts growth forecastNorway has cut its growth forecast for 2013 as the weakness of the Scandinavian country’s trading partners starts to take its toll, announced its statistics agency.

Growth in Norway, before taking into account the shipping and oil sectors, is predicted to decline from 3.4 per cent last year to 2.4 per cent, below the 2.6 per cent that had been forecast in March, revealed Statistics Norway (SSB).

In further negative news, the agency reduced its 2014 growth forecasts from 3.1 per cent to three per cent, but predicted that there would be an upturn in 2015 by raising its forecast from 2.8 per cent to 3.3 per cent. It said that it did not anticipate that the central bank will raise its rates before the middle of next year.

Norway is one of the few European countries that remains free of debt, and has barely suffered from the economic crisis that has ripped through the rest of the continent. During this time it has recorded impressive growth, although things have slowed down slightly in the past few quarters.

Unemployment is low but is on the up, while non-oil export businesses have been hindered by falling demand from overseas. In addition, the strong currency is affecting the country’s competitiveness.

Norges Bank’s next meeting on rates will be held on 20 June, and the majority of experts expect the rates to remain unchanged at 1.5 per cent. However, analysts in some circles feel there is a slight possibility of a cut, despite April’s rise in inflation easing the pressure on the central bank to reduce rates.