August 28, 2019 / 7:39 AM / 19 days ago

UPDATE 2-Norway set for strong growth despite global trouble-fin min

* Oil industry investment, weak currency boost growth

* Brexit, global slowdown have not hurt Norway

* 2019 expansion strongest in 7 years (Adds quote, background)

By Terje Solsvik

OSLO, Aug 28 (Reuters) - The Norwegian economy is on track to grow at a faster than normal pace in 2019 and 2020 despite an international slowdown, Finance Minister Siv Jensen said on Wednesday.

“Our current forecasts for the Norwegian economy indicate that growth is holding up very well, above the trend, both for this year and next,” she told a news conference at the start of a government meeting to discuss budget priorities for 2020.

At stake in cabinet meetings on Wednesday and Thursday is how much cash Norway should spend next year from its $1 trillion sovereign wealth fund, the world’s largest, at a time of rapid domestic growth and a slowdown abroad.

In 2019, the government plans to spend 238 billion Norwegian crowns ($26.6 billion) from the fund, corresponding to 2.9% of its value at the start of the year, just short of the 3% guideline set by parliament as a long-term average.

While some economists have argued the government should further curb spending at a time of solid growth, Jensen said her budgets were in fact already showing restraint.

“By limiting spending in good times we’ll avoid putting undue pressure on interest rates or on the crown,” she said.

The Norwegian currency has weakened by some 6% on a trade-weighted basis since the 2019 budget was presented last October, boosting the prospects of exporters even though the country’s central bank has raised interest rates.

Fuelled by investment growth in its oil industry and the currency decline, the economy is projected to grow by 2.7% in 2019, the fastest pace in seven years, and by 2.5% in 2020, the government projected in May.

Jensen did not provide new forecasts on Wednesday. Both the finance minister and Prime Minister Erna Solberg said they were prepared to act in case of a negative impact from Brexit or from a slowdown in the global economy.

“There is nothing to indicate that outside factors are having an impact now ... (but) we’ve demonstrated our ability to turn things around if needed,” Jensen said.

While the budget will not be revealed in full until Oct. 7, some priorities are already known.

Solberg on Friday took the unusual step of publicly demanding that coalition partners accept her plan for how to fund roads and public transport over the coming decade, or otherwise leave the government.

The gambit paid off when the Progress Party, the Christian Democrats and the Liberals all fell into line, thus preserving the prime minister’s majority in parliament. (Reporting by Terje Solsvik, editing by Gwladys Fouche and Toby Chopra)

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