OSLO, March 31 (Reuters) - The Norwegian economy is holding up better than many other Western states in the global economic crisis and will emerge less damaged than its peers, the prime minister said on Tuesday.
Unemployment, although on the rise, is still low by international standards at around 3 percent, and the central bank has slashed its key rate to 2.0 percent -- down 3.75 points since last October to help fuel the economy during the downturn.
“We will get through this crisis with less damage than many other countries,” Prime Minister Jens Stoltenberg said in a speech to the financial industry, repeating that his biggest concern was still rising unemployment.
Stoltenberg warned that problems in the labour market could last long after financial markets had turned around.
The red-green coalition government has announced several stimulus measures to counteract some of the worse effects of the crisis and to fight the rising unemployment, and has earlier said there may be further aid to come.
Stoltenberg said it was too early to say if there would be additional measures in the revised 2009 budget due in May.
The head of Norway's biggest banking group DnB NOR DNBNOR.OL noted that most people were reaping the benefits of lower rates, warning against a too pessimistic view of the economy.
“It is important not to forget that Norway is in a unique situation,” DnB NOR’s Chief Executive Rune Bjerke told news channel TV2.
“Even if we will see unemployment rising also here, most consumers will see purchasing power improve significantly in 2009... which should mean that things will not be as bad as the impression one gets from reading the papers,” Bjerke said.
“All in all, Norwegian banks are more solid than banks in other countries.”
But Bjerke said it was too early to say that the country’s banks have recovered after the crisis, and repeated that DnB NOR expected 2009 writedowns of around 8-10 billion crowns ($1.18-$1.48 billion).
“The question is if we will handle the losses, and we definitely feel that we will,” Bjerke said.
Bjerke said that lending growth in DnB NOR would fall to 3-5 percent in 2009, down from around 20 percent in 2008 -- largely due to stricter terms from the banks and lower demand.
Norwegian credit growth slowed to 9.4 percent year-on-year in February, slightly less than the 9.3 percent median expectation by analysts and down from 9.9 percent in January, Statistics Norway reported. (Reporting by Aasa Christine Stoltz; Additional reporting by Joachim Dagenborg; Editing by Andy Bruce)
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