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ECONOMY

Unemployment in Norway to rise, says new economic forecast

Unemployment in Norway is set to increase in the months ahead, according to a new economic forecast from the Confederation of Norwegian Enterprise (NHO).

Published: 4 October 2022 11:19 CEST
Unemployment in Norway to rise, says new economic forecast
Unemployment in Norway is set to rise, according to new economic forecast. (Photo by Fredrik Varfjell / AFP) / TO GO WITH AFP STORY

The Confederation of Norwegian Enterprise (NHO) presented its economic forecast on Tuesday morning. Øystein Dørum, NHO’s chief economist, believes that unemployment in the country is set to increase.

Dørum’s latest forecasts are quite gloomy – he believes that unemployment will rise and describes the current situation in the Norwegian economy as characterised by a shortage of goods, raw materials, and energy. 

At the end of September, registered unemployment in Norway stood at 1.6 percent of the workforce.

After the COVID-19 pandemic in Norway effectively ended, employment growth has been at its highest since the mid-1990s. However, several indicators now point to a cooling off of the labor market in the coming years.

According to Dørum, the Labor Force Survey (LFS) unemployment rate (which accounts for unemployed people looking for work without necessarily being registered at the NAV) will amount to 3.1 percent in 2022 and increase to 3.4 and 3.7 percent in 2023 and 2024, respectively.

Decreased demand for labour

Furthermore, NHO’s chief economist warns that the proportion of NHO companies that reported a lack of access to qualified labour decreased in the third quarter of 2022, in line with their employment prospects.

More than one in three companies believe that the market outlook for the next six months has worsened or will worsen.

According to Statistic Norway (SSB) figures, the number of newly advertised job positions is also lower compared to Spring figures, and the decline in unemployment has somewhat leveled off.

The survey among businesses for the third quarter has also shown that more companies now want to reduce the number of workers than increase it.

Every tenth company says they plan to announce layoffs in the next three months. In addition, 8 percent said they plan to dismiss workers, Norwegian Broadcasting (NRK) reports.

“The turnaround has been particularly abrupt in tourism and business-related service provision,” the NHO’s report states.

In conclusion, the NHO assumes that growth in the workforce will level off when activity in the Norwegian economy declines.

 

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MONEY

Norway’s trillion dollar wealth fund posts 107 billion dollar first quarter gain

Norway's sovereign wealth fund, the world's largest, posted a gain of more than $100 billion in the first quarter amid the global stock market recovery, it said Thursday.

Published: 18 April 2024 16:28 CEST
Norway's trillion dollar wealth fund posts 107 billion dollar first quarter gain

The fund — fuelled by the Norwegian state’s oil and gas revenues — saw a return of 6.3 percent in the first three months of the year.

The $107 billion gain brought the fund’s total value to a dizzying 17.7 trillion kroner ($1.6 trillion) at the end of March, or almost $291,000 for each of Norway’s 5.5 million inhabitants.

“Our equity investments had a very strong return in the first quarter, particularly driven by the tech sector,” the fund’s deputy chief executive Trond Grande said in a statement.

Shares, which accounted for 72.1 percent of the fund’s portfolio, saw a 9.1 percent return in the first quarter, buoyed by a stock market rally amid the prospect of falling interest rates.

The fund is the world’s biggest single investor, with stakes in some 9,000 companies around the globe and representing 1.5 percent of the total market capitalisation.

Its bond investments, representing 26 percent of assets, meanwhile fell by 0.4 percent in the first quarter. Real estate holdings and those in unlisted renewable energy projects also fell, by 0.5 percent and 11.4 percent respectively.

Weaker currency

Norway’s currency, the krone, weakened against several main currencies during the quarter, contributing $59 billion to the increase in the fund’s value.

According to a ranking by the Sovereign Wealth Fund Institute (SWFI), the Norwegian fund is the biggest in the world, just ahead of the China Investment Corporation.

Created in the early 1990s, the fund is aimed at financing future spending in Norway’s generous welfare state, as revenue from oil and gas exports are expected to decline over the long term.

All of the state’s oil revenues are placed in the fund: taxes, profits from the state’s holdings in oil and gas fields, and dividends from oil firm Equinor, owned 67 percent by the state.

It is managed by the country’s central bank.

Norwegian governments are allowed to tap the fund to balance the budget, but within a strictly-defined framework.

They are only allowed to use the fund’s estimated returns, not the capital itself, to prevent the fund from being depleted.

All investments are made outside Norway to avoid destabilising the country’s economy.

The fund also follows strict ethical guidelines set by the finance ministry.

It is, for instance, barred from investing in companies accused of serious violations of human rights, child labour or serious environmental damage, as well as manufacturers of “particularly inhumane” arms and tobacco firms, and companies which derive a large part of their activities from coal.

Dozens of groups, including giants like Airbus, Boeing, British American Tobacco and Walmart, have therefore been blacklisted by the fund.

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