OSLO (Reuters) - The Norwegian center-right coalition government cut its outlook for 2020 growth on Tuesday as it began work on a fiscal spending plan for next year.
The finance ministry’s forecast for growth in 2019 mainland GDP stood at 2.7 percent, equal to a prediction made last October, while the 2020 forecast was cut to 2.5 percent from 2.8 percent.
While the economy is in a cyclical upturn, with growth exceeding the long-term average, the outlook was mixed, the government said in a statement.
“International economic growth has been high, but the economic upturn is abating and growth has dropped in several countries. This may eventually translate into lower demand for Norwegian goods and services,” the Finance Ministry wrote.
“On the other hand, cost cuts in the petroleum industry contribute to good profitability and high activity on the Norwegian continental shelf,” it added.
The predictions for growth and other economic variables will help determine how much the government plans to spend from Norway’s $1 trillion sovereign wealth fund, the world’s largest, when its 2020 budget is presented to parliament on Oct. 7.
The Norwegian crown strengthened slightly following the statement, trading at 9.6980 against the euro at 0822 GMT from 9.7041 earlier.
Prime Minister Erna Solberg, who faces pressure from members of her four-party coalition currently meeting at a secluded resort north of Oslo to prioritize their wishes, has repeatedly called for restraint. Solberg leads the Conservatives.
“The greatest challenge is that the cost of all the things we desire to do is greater than the available sum,” Solberg told TV2 earlier on Tuesday.
The meeting of cabinet ministers is expected to last until March 21.
Separately, the board of the Norwegian central bank is due to hold a rate meeting on March 20, at which it is widely expected to raise its key policy rate. Its decision will be published the following day.
Reporting by Terje Solsvik; Editing by Gwladys Fouche and Catherine Evans