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Norway Country Risk Report Q2 2016

Norway Country Risk Report Q2 2016

Core Views

A sharp slowdown in hydrocarbons sector investment amid a collapsein global oil prices will weigh on Norwegian GDP growth between2016-18.

The Norwegian government will continue to expand fiscal policy inorder to stimulate demand in the short run and to lay the structuralfoundations for stronger non-hydrocarbons growth over the longerrun.

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 Risks
Chapter 1: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Growth Outlook
Cautiously Optimistic On Near-Term Growth
Norwegian real GDP growth will slow significantly in 2016, to 1.2% from 1.7% in 2015. However, the economy should be able to avoid a
significant contraction due to several factors including an expected rebound in oil prices by the end of 2016.
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Currency Forecast
NOK: Appreciation Alongside Oil Rebound
The Norwegian krone is finally bottoming out versus the euro after two years of heavy losses. We expect modest appreciation over the
next two years as oil prices rebound and the central bank ends its easing cycle.
TABLE: BMI CURRENCY FORECAST
Monetary Policy Framework
Chapter 3: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Migration Policy Poses Only Moderate Risks To Political Stability
We do not expect the large influx of migrants into Norway to generate the same degree of political instability seen elsewhere in Europe,
most notably in neighbouring Sweden. The anti-immigration Progress Party will continue to cooperate with the Conservative Party in
government, with official immigration policy becoming increasingly stringent.
TABLE: POLITICAL OVERVIEW
Chapter 4: Operational Risk
SWOT Analysis
Operational Risk Index
Chapter 5: BMI Global Macro Outlook
Global Macro Outlook
Downside Risks Gather Momentum
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
TABLE: MACROECONOMIC DATA & FORECASTS

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