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Norway Country Risk Report Q2 2015

Norway Country Risk Report Q2 2015

Core Views

A sharp slowdown in hydrocarbons sector investment amid a collapsein global oil prices will weigh on Norwegian GDP growth in2015 and beyond.

However, the economic downturn should be limited. The decline inthe Norwegian krone will help boost non-oil exports, and the governmenthas the option of expanding fiscal policy by dipping into thecountry's USD860bn sovereign wealth fund.

The residential housing market has been a major contributor tooverall real GDP growth for most of the past decade, but is set tocool over the next few years.

We envisage broad political continuity to the next election in 2017,with the Conservative-Progress minority coalition government achievingmodest progress on its reform agenda.


Executive Summary
Core Views
Key Forecast Changes
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Stability To Be Maintained, But Challenges Mounting
Political risk in Norway has increased modestly since H114, as the Conservative-led minority coalition government faces challenges
ranging from an economic slowdown to geopolitical risks emanating from Russia. Nonetheless, we continue to envisage broad political
stability through to the next election in 2017.
table: Political Overview
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Activity
Slowdown, But Crisis To Be Avoided
A sharp slowdown in hydrocarbons sector investment amid a collapse in global oil prices will weigh on Norwegian GDP growth in
2015 and beyond. However, the economic downturn should be relatively limited, as the decline in the Norwegian krone will help boost
domestic non-oil production, and the government has the option of expanding fiscal policy by dipping into the country's USD860bn
sovereign wealth fund.
tab le: GDP Con tribu tion To Gro wth
Currency Forecast
NOK: Modest Appreciation After Big Rebound
The Norwegian krone's dramatic oil-related collapse and subsequent rebound has left it around a reasonable level versus the euro, and
we see a range of NOK8.00-9.00/EUR prevailing for the next two years. Our bias is for modest appreciation versus the euro in 2015, as
we anticipate there will be fewer Norges Bank rate cuts than are currently priced in.
table: BMI CURRENCY FORECAST
tab le: Exchange Rate
table: Long-Term Macroeconomic Forecasts
Chapter 3: Operational Risk
Operational Risk Index
Chapter 4: Key Sectors
Automotives
tab le: Autos To tal Marke t - His torica l Data And Forecas ts
tab le: Passenger Car Marke t - His torica l Data And Forecas ts
tab le: Commercia l Vehic le Marke t - His torica l Data And Forecas ts
Tab le: Motorc ycle Marke t - His torica l Data And Forecas ts
Other Key Sectors
Table: Oil and Gas Sector Key Indicators
Tab le: Pharma Sec tor Key Indica tors
Table: Telecoms Sector Key Indicators
Table: Infrastructure Sector Key Indicators
Table: Defence and Security Sector Key Indicators
Chapter 5: BMI Global Assumptions
Global Outlook
Weaker EMs To Weigh On Growth
Table: Global Assumptions
Tab le: Deve loped States , Rea l GDP Gro wtH, %
Tab le: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWT H FORECASTS, %
Tab le: Emerging Marke ts, Rea l GDP Gro wth, %

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