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The crown crisis yields grim figures in the government’s revised 2020 budget. Prospects for economic growth have sharply lowered from the fall budget.
Prime Minister Erna Solberg (H).
Vidar Ruud
published:,
The case is being updated.
Modern Norway has rarely seen major changes to a state budget for six months.
“The virus outbreak has affected the Norwegian and international economy. The outlook for the Norwegian economy weakens considerably. In the revised national budget for 2020, continental GDP is projected to fall 4.0% this year, but uncertainty is high, “writes the government.
When the original 2020 budget was presented in October, the government expected growth of 2.5% in the continental economy this year.
In 2019, growth on the Norwegian mainland (GDP excluding oil activities) is now estimated at 2.3 percent.
Last week, Norges Bank projected a decline in the mainland economy of 5.2% this year, from a growth estimate of 0.4% as of March 12. Since then, the bank has reduced interest rates to zero to cushion the worst effects.
The government’s comprehensive response to the crown crisis also has drastic consequences for the use of oil money. In October, the government proposed spending 244 billion kroner this year, which corresponds to a withdrawal of about 2.6 percent from the Petroleum Fund.
The use of oil money is now estimated at NOK 419.6 billion, corresponding to 4.2 percent of the Norwegian Petroleum Fund.
High Vacancy
Norway now has the highest unemployment rate in 75 years. The government estimates an increase in registered unemployment (Nav) to 5.9 percent this year from 2.2 percent last year.
In the fall, the government expected a registered unemployment rate (Nav) of 2.1 percent this year, but that figure seems like a distant past now.
Unemployment increased dramatically after the crown crisis and 246,000 people are now fully unemployed, corresponding to 8.8 percent of the workforce.
If the partially unemployed are counted, the figure is 408,400 people. This means that 14.6 percent of the workforce is registered as job seekers with Nav.
Drastic interest rate cuts
The dramatic development is emphasized by Norges Bank, which has lowered its key rate three times since March 12. The interest rate is at the lowest level of zero percent of the time.
The crisis also caused the crown to plummet to the lowest time levels in March. Last week, Norges Bank confirmed that it intervened with extraordinary NOK purchases of NOK 3.5 billion.
When the crown was at its weakest point, one euro was worth more than NOK 13, compared to NOK 9.83 in the New Year. At its weakest point, a dollar was worth more than $ 12, up from $ 8.76 on New Years.
Norges Bank has also significantly lowered its projections for some of the key figures in the Norwegian economy.
The bank expects house prices to drop five percent from March this year to March next year, while prices were previously expected to rise.
The bank assumes that oil investments will fall nine percent in 2020. Just two months ago, the central bank predicted a slight increase in oil investments this year.
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