‘No Crisis’ Norway holds talks on oil’s plunge cost

Norway’s prime minister, finance minister and central bank governor are holding an extraordinary meeting to assess just how bad the deepening plunge in the price of oil will be for the overall economy of western Europe’s biggest petroleum producer.
The premier and the finance minister will also later meet with economists today to “discuss the economic situation,” according to a statement from the prime minister’s office. The meetings starts at 10 a.m.
Policy makers have so far avoided using the word crisis in assessing the state of the economy, saying that stabilizers such as the weakening krone, lower interest rates and record fiscal stimulus are kicking in to pick up the slack. Yet they have lately acknowledged that the nation’s oil industry is in a crisis and that the almost 30,000 jobs now lost won’t all come back.
“We still have economic growth in Norway,” Prime Minister Erna Solberg said in an interview with Bloomberg Friday in Davos. “When the oil price falls our currency has depreciated, it means that other parts of our economy are picking up but of course it’s at a lower level than it has been in the last years.”
The economy is being helped by its weak currency, which is down about 15 percent from a high against the euro last year, to withstand a plunge in the price of oil. The country gets about one-fifth of its economic output from the petroleum industry. The price for the benchmark Brent oil blend reached a 12-year low of USD27.10 last week, compared with a 2014 high of $115.
Solberg said that while the nation’s oil industry is in a “crisis,” the overall economy is not. The government is spending a record amount of its oil wealth this year to stimulate growth and is even dipping into its massive sovereign wealth fund for the first time. Bloomberg