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The blockade is mentioned during the Napoleonic Wars. The Black Plague is drawn. Is there an economic crisis worse than the one Norway is currently facing?
The Napoleonic wars are the closest we will be to an economic crisis similar to what Norway is facing now, says the professor of economic history. The photo was taken during a so-called “re-enactment” of the Battle of Austerlitz during the Napoleonic Wars.
MARTIN DIVISEK / EPA
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– I am a little surprised that it is not reflected so much in the public debate. There has been more in the infection situation. It is also important, but the economic recession appears to be very deep and very serious, Einar Lie professor of economic history at the University of Oslo tells NTB.
The arrows actually point downward for the Norwegian economy as a result of coronary measures, international unrest and a drop in oil prices. And historians are struggling to find parallels.
– We have figures on gross domestic product (GDP) since 1816. Never before has it fallen 14 percent in 14 days, as it did in March this year, says Professor of Economic History Ola Honningdal Grytten of the Norwegian School of Economics (NHH) to NTB.
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Napoleonic wars
He thinks that we will probably have to go back to the blockade during the Napoleonic wars from 1807 to 1814 to find a similar crisis situation.
– That’s the closest I can think of. Due to the British blockade, a lot of production was stopped and imported products were not allowed in, he says.
“The authorities have closed so completely that we have never experienced it before,” says Grytten.
30s
The crisis of the thirties has been mentioned as a possible parallel. In 1931, GDP fell 7.8 percent. So far, Statistics Norway and Norges Bank have calculated that the drop in GDP will be between 5 and 6 percent this year. Therefore, the annual decline does not appear to be as severe.
But Lie notes that the 1931 figures were also influenced by another factor.
– The crisis in the 1930s came to Norway at the same time as a very large year of strike in 1931. A protracted labor conflict contributed to the fall in GDP, so the crisis alone would have hardly diminished as much as we now see the contours, he says.
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– Very deep drop
On Thursday, for the first time in history, Norges Bank cut its key rate to zero percent. Norwegian statistics have determined that the sudden spike in the economy loses historical parallels.
Lie says it’s hard to predict how things will go, precisely because we’ve never experienced anything like this.
– The most serious consequences come from the stops and not from infections and diseases. We do not know the effects of this. What we see and arrive on time, when it comes to the drop in trade, income and GDP, indicates that the drop is very big and very deep.
It also says that there is little to indicate that there will be a rapid and abrupt rise to previous levels as society opens up.
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More powerful than the financial crisis.
The professor points out that Norges Bank did not come close to setting the interest rate to zero during the financial crisis. And this is exactly what the Governor of the Central Bank, Øystein Olsen, also pointed out in relation to the decision on the interest rate.
“The setback is much more severe than in the financial crisis twelve years ago,” he said.
Olsen admitted that he is also surprised by the scope.
– You have heard of pandemics, but for me it was more than hypothetical. It is good that the health authorities, both in Norway and internationally, think about this, but to be honest, I had not imagined that it would come the way we have now experienced. And, as an economist, I have not foreseen the consequences that we see now.
