Norwegian economic growth likely to normalize in 2017

The combination of heavy cost cutting in the Norwegian sector and slightly higher oil prices has lead to the anticipation of oil investment to bottom out in the course of 2017 in the country, according to Danske Bank. The oil downturn’s negative impacts on mainland growth would therefore be largely reduced. Although fiscal policy is likely to be much less expansionary than in 2016, positive growth contribution of about 0.5 percent is expected, giving a considerable boos once again in 2017 alongside quite low interest rates, noted Danske Bank.

Meanwhile, inflation is likely to slow gradually as the impacts of the NOK’s depreciation wane, and along with a more robust labor market this would give additional support for private consumption. On balance, Norway’s mainland GDP is expected to grow 2.3 percent next year, stated Dankse Bank.

Meanwhile, the recent rebound in crude oil prices has underpinned a stable rise in the NOK. Moreover, the flow of economic data in recent times has been encouraging, indicating towards a stabilization in Norwegian activity that has led to certain scaling back in expectations of additional easing by the Nordes Bank. With waning expectations of additional rate cuts by the central bank coinciding with an ongoing recovery in oil prices supports the view of a stable drop in EUR/NOK to 8.90 by mid-2017, according to Lloyds Bank.