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Norway’s Trade Balance Falls As Oil Prices Tumble

James Boston
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Norway’s Trade Balance Falls As Oil Prices Tumble

Norway’s Balance of Trade figure last month is looking more like a positive anomaly than any sustainable growth in the trade surplus. This month’s figure, relating to November, has shown the number drop back to NOK 24.6Bn which is much more in keeping with recent average levels compared to the October figure of NOK 31.6Bn, despite the fall off in the surplus market expectations for NOK 21.7Bn were easily exceeded. Overall trade activity was lower for Norway during the month of November, Imports for the month have been announced as NOK 46.27Bn, this is an 11% fall on the October reading, Exports however underwent a greater drop to come in at NOK 70.91Bn which represents a 15% drop from the prior month. The value of energy exports have been the hardest hit due to tumbling prices, Crude Oil shipments fell 21.5% to come in at NOK 18.26Bn while Natural Gas exports fell 13.3% to register at NOK 19.07Bn.

Falling oil prices are beginning to have a significant impact on Europe’s largest petroleum producer, growth forecasts for Norway have been curtailed in response to global drop in value of one of it’s major exports. Additionally, the current prices being obtained for oil mean that it is becoming uneconomical for many of Norway’s oil producers to expand their activities, the Norwegian economy is used to regular investment in it’s oil industry and this has all but dried up in recent month’s as once profitable projects become unviable.

The Norwegian monetary authorities are scrambling to formulate a policy response to the unexpected fall off in economic activity. Norges Bank last week unexpectedly cut the country’s base interest rate by 25 basis points to 1.25%, while the Bank’s governor, Oystein Olsen, admitted that the Norwegian economy was ‘notably weaker’ than previously envisaged. Olsen also admitted that there is fifty percent chance that a further interest rate cut may be forthcoming.

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