OSLO: Oil investments, one of the main drivers of Norway’s economy, are expected to fall for a third straight year in 2017 as companies feel the pinch from weak crude prices, Statistics Norway said here the other day.
Preliminary estimates based on a survey of oil companies showed they were set to invest 153.2 billion kroner (€16.5 billion, $18.5 billion at current exchange rates) next year, down by 7.6 percent from the 165.9 billion expected this year.
The estimates are tweaked throughout the year and may change. The new data suggest however that the rate of decline is slowing, with this year’s drop expected to be 14.8 percent.
The figures are slightly lower than those of the Norwegian central bank.
Since December 2014, the bank has cut its key interest rate four times, slashing it to 0.5 percent in a bid to kickstart the country’s economy, which has been hit hard by the fall in the oil price.
After 15 years of solid growth boosted by rising oil and gas prices, the Norwegian economy has rapidly slumped.
Despite an expansionary budget, the government expects the economy to grow by just one percent this year, while the unemployment rate of 4.6 percent is hovering around the highest level in a decade.
According to Nordea Markets and DNB Markets, Thursday’s figures, while disappointing for the central bank, are not expected to have any significant influence on its decisions.
“The main message from the survey is that the drop in oil investment will slow next year pointing to a pickup in mainland growth,” Erik Johannes Bruce of Nordea Markets said.
Numerous economists expect the central bank to reduce its key rate again in September.
