Economic Outlook: A Little Pain Needed

Norgesbank

Latest edition of Economic Outlook by Nordea Bank shows clearly that the economic problems in Europe is not over. Norway is affected relatively little by this economic turmoil. The situation will affect the Norwegian economy, says chief economist.

Juel compare the situation in Europe having a strong pain in the body. If your doctor drugs you as a solution to your pains, there is the danger that problems arise when the anesthesia is over. Juel therefore believes that too much financial assistance can lead to a passivation of the affected countries. The politicians will think that the crisis is over and defer the implementation of the unpopular reforms and budget cuts that will be needed to stabilize the economy in the long run. 

– The right thing will be to help them so they get the time they need to implement the necessary reforms. But not so much to let them begin to relax, explains Juel.

Norway in good form

Juel believes the highh activity in the construction and development of oil fields has had strong positive effects on the Norwegian economy. Low interest rates have also helped to stimulate increased investment and higher consumption. Furthermore, there is strong growth in activity in the public sector. This development has led to stronger growth and improved labor market than expected. 

Despite this positive outlook, he reminds that interest rates will not remain low forever. 

– It may be wise to pay down debt with the profits you get from low interest rates. To fix the interest rate may also be a good idea, says Juel. 

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