Øystein Dørum, chief economist at DnB Nor Markets said in the company's latest economic outlook that while risks have increased, the world is likely to avoid a double dip recession.
Øystein Dørum, chief economist at DnB Nor Markets said in the company’s latest economic outlook that while risks have increased, the world is likely to avoid a double dip recession.
Globally there is no doubt that growth has slowed, and uncertainty over the outlook has increased.
Weaknesses are seen across a number of markets and regions; the US will avoid a recession, but the eurozone is on the verge of a collapse, while the so-called Tiger economy of Sweden is losing strength. The UK is focused on savings, and Japan is treading a heavy path, the report suggests.
Some positives stand out, such as belief that China’s growth will remain strong, and that oil, on which so much of Norway’s own wealth depends, is set to rise over time.
Interest rates are set to remain at record lows for a long time, the report suggests.
“We believe central bank interest rates in the bigger economies will mostly remain unchanged from today’s lows through the autumn of 2013 or longer. This will also hold down long term interest rates. If the uncertainty in financial markets continues it could in the worst case lead to a collapse in the eurozone, including a banking crisis,” the report said.
Norway itself is in a relatively strong position, the report added. It has relatively full employment, and certain non-oil related exports have continued to do well. One challenge will be inflation. The strong economy is likely to see wages increase by an average of 4.3% this year.
The strong local economy will also see growth in the form of higher consumption. The report forecasts private consumption will grow by 2.7% this year then by 3.6% in 2012 and 3% in 2013.
Although overall exports may dip -1.8% this year, next year Norway’s exports should grow by 1.4%, rising by 1.9% in 2013, and 2% in 2014.
GDP growth should almost double over the next year, from a projected 1.5% in 2011 to a rate of 2.7% in 2013. For so-called mainland Norway the rgrowth could be 3.5% next year.
To read the full report (Norwegian language) click here: https://www.dnbnor.no/portalfront/nedlast/no/markets/analyser-rapporter/norske/okonomiske-utsikter/HR110818.pdf