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Norway looks for silver lining in weak oil climate

Energy-rich country expects at least some form of economic recovery in years ahead.

By Daniel J. Graeber
Statistics office in Norway searching for bright spots in an economy burdened by the ongoing decline in crude oil prices. File photo by A.J. Sisco/UPI | <a href="/News_Photos/lp/edd40f61776d9464ec6e9e4b1114d6a8/" target="_blank">License Photo</a>
Statistics office in Norway searching for bright spots in an economy burdened by the ongoing decline in crude oil prices. File photo by A.J. Sisco/UPI | License Photo

OSLO, Norway, Oct. 29 (UPI) -- Though lower crude oil prices continue to drag on the Norwegian economy, the government said it expects some form of recovery by late 2016.

A publication from Statistics Norway said oil prices are expected to remain low, spelling trouble for an economy that relies heavily on oil and gas for export revenue. The government said the depressed industry should result in a reduction in investment volume by about 30 percent through a five-year period ending in 2018.

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The statistics office said mainland gross domestic product increased by less than 1 percent between the second quarter of 2014 and the second quarter of 2015. Unemployment, meanwhile, has increased by about 1 percent year-on-year.

"The fall in demand from the petroleum industry, partly caused by sharp decline in oil prices, is a dominant factor behind this development," Statistics Norway said.

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Nevertheless, the office said there should be some growth in the Norwegian economy. While the unemployment rate is expected to stay above 4 percent until at least 2018, "there will be a cyclical turnaround to increased growth."

Statistics Norway said total sales of petroleum products from Norway in September amounted to 4.5 million barrels of oil equivalent, nearly a 9 percent decline year-on-year.

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Norge Bank, the country's central bank, said a weakened value of its currency, the krone, could make exports more attractive, however.

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"This implies a very sharp improvement in cost competitiveness spurring the development in the tradeable sectors," Statistics Norway said. "Lower interest rates, more expansionary fiscal policy, decreasing drop in demand from the petroleum industry and not least slightly increasing growth in Norwegian export markets, are other factors behind the expected turnaround."

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