Norway’s Economy Follows Oil Price

Norway’s Economy Follows Oil Price

The economy of Norway is a “train wreck in slow motion,” according to Svenska Handelsbanken AB, reported Bloomberg. Norway is western Europe’s largest oil producer, with hundreds of offshore platforms and fields in the North Sea.

The abundance of resources has helped the country maintain a substantial sovereign wealth fund, currently valued around $875b. The fund has provided a valuable backstop for the economy, and Norway’s unemployment rate has hovered around 4%.

However, the sustained downturn in oil prices is beginning to hurt the national economy, and the central bank is considering cutting deposit rates by a quarter, lowering it to a record-low .75.

The prime minister, Erna Solberg, has been publicly vocal about state efforts to combat the downturn.

“Next year’s budget will be, even more than this year’s budget, focused on the transformation of the Norwegian economy, the competitiveness issues and on fighting unemployment,” Solberg said, reported the Salt Lake Tribune. The unemployment rate in the country is the highest it has been in at least 11 years.

Solberg is hoping that recent tax reforms will make the country more attractive to investment, both in the oil sector and otherwise.

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