Investments by Norway’s oil industry will decline more than expected in 2017 and economic growth is now seen fractionally lower than forecast, the country’s finance ministry said March 14 at the start of a three-day government budget meeting.
At the same time, a rise in the price of crude, Norway’s top export, and cost cuts by the oil industry have reduced the risk of a major economic setback, it added.
Oil and gas firms are now expected to cut investments by 11.6% year-on-year, against an October forecast of a 10% decline.
Economic growth in the Norwegian mainland economy is now seen at 1.6%, below a previous forecast of 1.7% but still double the 0.8% recorded in 2016, which saw the weakest expansion in seven years.
The government now predicts an average oil price of 479 Norwegian crowns ($55.90) per barrel in 2017, up from an earlier forecast of 425 crowns and well above the 379 crowns per barrel earned in 2016.
State-controlled Statoil is Norway’s top oil and gas firm.
Prime Minister Erna Solberg, speaking at the start of the budget conference, said the economy was facing brighter prospects but that unemployment was still too high.
Economists expect the Norwegian central bank to keep rates steady at a record-low 0.5% when its board meets later this week.
($1 = 8.5693 Norwegian crowns)
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