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Norway Won't See `Appreciable' Rebound for 2 Years, Agency Says
Norway’s economy won’t see an “appreciable upswing” for two years as sluggish growth in the U.S. and European austerity measures hamper the oil exporter’s sales abroad, the country’s statistics office said today.
Gross domestic product will expand 1.5 percent this year, compared with a June forecast for a 1.6 percent expansion, the office said in a statement on its website today. Output will grow 2.9 percent in 2011 and 2.8 percent in 2012, it estimates. Underlying inflation, which adjusts for taxes and energy, will average 1.4 percent this year and next before accelerating to 2 percent in 2012, it said.
“The Norwegian economy remains clearly in recession after four quarters of moderate growth in GDP for mainland Norway,” the office said. “Increased domestic demand is expected to stimulate growth. But there will not be an appreciable upswing for another two years.”
The weak economic outlook means policy makers should shelve monetary tightening for six months longer than the central bank’s current forecast suggests, Oeystein Olsen, the head of the Oslo-based statistics office, said in an Aug. 25 interview. Norges Bank Governor Svein Gjedrem said last month the bank will resume its tightening cycle at the “turn of the year.” Olsen is tipped by most economists to replace Gjedrem when he steps down in December.
“Prospects of very low interest rates internationally, moderate growth in the Norwegian economy and low inflation underpin our estimation that the key interest rates will remain unchanged until the summer of 2011,” the office said today. “We anticipate a gradual increase in the money market rate from the second half of next year, to reach 5 percent at the end of 2013.”
Olsen in the Aug. 25 interview said he “will consider” applying for the Norges Bank governorship if he is approached for the job.
To contact the reporter on this story: Josiane Kremer in Oslo at Jkremer4@bloomberg.net
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