2 April 2020

Norwegians have long considered themselves annerledeslandet – the different country. With abundant natural resources, petroleum and fish in the water used for hydroelectric power, the enviable lifestyle of the Scandinavian nation is supported by a huge sovereign wealth fund which helps support its generous welfare state.

It was until the coronavirus pandemic. The crisis, accompanied by a collapse in crude and Norwegian currency prices, has left economists wondering if the biggest oil producer in Western Europe is so different after all.

“After that, it will be a new reality for the government, the private sector and everyone in Norway. We will all have to tighten our belts. We will become much more like other Scandinavian countries, ”said Kari Due-Andresen, chief economist for Norway at the lender Handelsbanken.

The most dramatic indicator of stress in Norway has been an increase in the number of unemployed. Unemployment has more than quadrupled in two weeks to its highest level since the Second World War. The financial markets were stunned by American figures showing that around 1% of the population had registered as unemployed within a week. But in Norway, more than 5% of the population have applied for unemployment benefits in the past two weeks.

“Norwegian companies are in their toughest fight yet,” said Norwegian Minister of Commerce and Industry Iselin Nybo on Friday. The center-right government of Oslo now predicts that the economy will contract this year by 1.5 to 7%, depending on the duration of the acute phase of the pandemic. He estimated that the crisis had already cost him 196 billion Norwegian kroner (19 billion dollars) in higher spending and reduced income.

“The worst is ahead,” said Hilde Bjornland, professor of economics at BI Business School in Oslo. “We will be more and more similar to other countries. We cannot continue to increase our budget deficits. “

She said that the problems facing Norway were worse than those of other countries because its largest income generator, oil and gas, was suffering from a collapse in demand and prices which would have far-reaching effects. long-term. “In the short term, we will suffer an additional shock on the other countries. Our main industries are going to be in a very difficult position, ”she said.

“Annerledeslandet” was the title of a poem by Rolf Jacobsen on the virtues of Norway, including the line “we collect gold coins from the seabed”, which became popular in 1994 as a slogan for the success of the non-campaign when voting on Norway’s opportunity to join It has become a sign of the difference between the Norwegian economy and its European neighbors. For example, the country’s economy barely suffered from the 2008 financial crisis and no suggestion of austerity was suggested.

However, even before the coronavirus crisis broke out, the governor of the Norwegian central bank warned that “we are becoming less different – because we have to become less dependent on oil”. Since Oystein Olsen made the comments last month, he has cut interest rates by 1.25 percentage points to just 0.25%, the lowest level in history.

https://dnyuz.com/2020/04/02/coronavirus-leaves-wealthy-norway-facing-tough-spending-choices/