The worst economic setback since the 1930s – NRK Norway – Summary of news from different parts of the country

– All economic indicators indicate that this is the biggest shock we have seen for the Norwegian economy and for the world economy. It comes to a complete stop, and the big question is how long will this last, and this is what will be absolutely crucial, chief economist Kari Due-Andresen in Handelsbanken tells NRK.

Due-Andresen paints a bleak picture of the country’s economy and the world economy.

The country’s economists are excited about the report released today by the International Monetary Fund. The question is how deeply the agency believes that the world economy will fall, and therefore also how the Norwegian economy will be affected. Signs suggest that the IMF is making gloomy forecasts.

“It is clear that we have entered a recession,” said IMF chief Kristalina Georgieva a few days ago.

The recession is a recession in the economy as measured by a fall in the country’s gross domestic product for two consecutive quarters or for an even longer period. Recessions often lead to rising unemployment and a sharp drop or rise in prices.

• Follow the IMF report presentation here

Hard times, but not depression

Here in Norway, the shutdown of the economy has already led to massive government unemployment and crisis measures, and many business leaders are looking to the future negatively.

Professor Ola Grytten from the Norwegian School of Economics has investigated historical economic crises. He believes that we will not have a repeat of the difficult 1930s.

– In 1930 we had a depression, when both business value creation and prices fell, and strengthened. When prices fall, companies put off investing and people put off buying and consuming, and this is even worse, says Professor Ola Grytten.

recession

But even though Norway is being hit this time, there are many indications that we are luckier than many other countries.

– What we are likely to experience this time around is a recession as production will decrease over time, says Ola Grytten.

The NHH professor sees little sign of a drop in prices in the future, but believes that authorities around the world should take further action. The well notes that long-term authorities cannot just implement measures that compensate for a closed economy.

“Authorities around the world must begin to inspire businesses and industry to increase food production and needs,” says Grytten.

– This crisis is a new type of shock for the economy. There is no production failure or demand failure. It is created by the government in the sense that there is a ban on the activity. Great uncertainty about the future will save those with high debt and increase their savings, which in turn will reduce demand, says economist Elisabeth Holvik of the Sparebank group1.

Norway is luckier

Several NRK economists have been in touch with the vision of a badly affected world economy ahead. And where authorities in other countries are now spending money that they may not have, to keep the wheels going in the economy, it may seem that Norway is luckier in many ways.

“We are left with a golden spoon in our mouths due to the oil fund, and the crown pandemic appears to be milder in Norway than in many other countries,” says Grytten.

In an overview of research giant FM Global, Norway also stands out as one of the best-equipped countries to bounce back when the virus releases the roof and the wheels start spinning again.

But anyway: everything is falling on how long the crisis lasts, economists believe NRK has spoken. Losses increase the longer the economy closes.

– No matter who bears the cost of this now, this will be something everyone will notice and everyone should hold back and tighten at the waist. This worries me that it will take time to get through this, says chief economist Kari Due-Andresen of Handelsbanken.