Norwegian exporters need to find alternative markets to Europe amid plans to cut more jobs to start the year as the continent’s debt crisis saps demand, the head of the country’s largest business group said.
“The lack of growth in Europe is now having an impact on the order books of Norwegian industry,” John G. Bernander, chief executive officer of the Confederation of Norwegian Enterprise, said today in an interview in Oslo. “Eight out of 10 kroner of our export value will go into Europe, so what we are saying is that because of the lack of growth in Europe you need to prepare to develop other markets.”
Growth is slowing in the economy of the world’s seventh-largest oil exporter as Europe’s leaders struggle to contain a debt crisis that started three years ago. The Nordic nation, home to Norsk Hydro ASA, Europe’s third-largest maker of aluminum, sends more than 60 percent of its exports to the European Union. Asia accounted for 14 percent of the nation’s exports through November last year, and the U.S. 8.5 percent.
Companies such as Renewable Energy Corp. ASA, Europe’s largest producer of solar wafers, as well as Norske Skogindustrier ASA, the world’s second-largest maker of newsprint, have announced jobs cuts amid waning demand and falling prices for their goods. A survey of purchasing managers released today showed manufacturing shrank the most since October 2009 as orders plunged and production stalled.
First Quarter Cuts
Bernander said that 25 percent of exporters contacted by his group plan to cut jobs in the first quarter.
Norway’s central bank last month cut its benchmark interest rate by 50 basis points to 1.75 percent to shield the world’s second-largest gas exporter. The European Central Bank also cut its benchmark rate in November and December, reaching 1 percent.
Bernander said the Norwegian cut was necessary to avoid “a very adverse impact on the currency exchange rates for Norwegian export industries.”
The Norwegian krone emerged as a haven for investors seeking to avoid the euro-area’s debt woes and after Switzerland capped franc appreciation. The krone hit an 8 1/2-year high against the euro in September, prompting Norges Bank Governor Oeystein Olsen to warn he may cut rates.
“We should not fall out of line with what is happening in Europe because that is where our destiny lies, at least for the new-term future,” Bernander said.