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Norway is emerging from the oil price downturn, with industries and regions reporting that output growth has “picked up somewhat” since February, and that growth is now at its strongest since the beginning of 2013 before the oil price rout started, according to a survey of central bank Norges Bank.
“Output growth is primarily being driven by higher public demand, but is also related to growth in private sector demand and a less pronounced decline in the oil industry,” Norges Bank said on Tuesday, adding that “the fall in output in the oil service industry has slowed.”
In the oil services industry, enterprises expect the decline in output to level off in the next six months, the central bank’s survey showed.
In terms of planned investments, Norwegian companies plan for a moderate rise in investment over the next 12 months, with all industries except the oil service industry expecting an increasing level of investment.
“The improvement was broadly based among sectors and signals that the contraction in the oil service industry has reached an end,” Erica Blomgren, chief strategist at SEB, told Bloomberg, commenting on the survey.
In its Nordic Outlook published in May 2017, SEB said about Norway’s economy: “The sharp contraction in capital spending in the petroleum sector has been a drag on growth since 2014, but the investment cycle has taken a turn for the better. Higher – and stable – oil prices have improved project economics and triggered more final investment decisions. Moreover, companies have boosted their capital spending plans for 2017. We now expect a 7.0 percent drop in oil sector investment in 2017 compared to -14.7 percent in 2016, while maintaining our 3.0 percent forecast for 2018.”
In February this year, Statistics Norway said that Norway’s economy had started to recover from the blow dealt by the oil price slump, but things were improving slowly. Including oil and gas income, Norway’s GDP expanded by 1.1 percent in the fourth quarter of 2016, on the back of rising oil investments—these went up for the first time in 13 quarters in Q4 2016.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.