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Norway firms see growth slowing in next six months, survey says
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OSLO (Reuters) – Norwegian companies expect economic growth to slow in the coming six months, a central bank survey showed on Tuesday, driven by high inflation, capacity constraints and expected higher interest rates dampening demand.
OSLO (Reuters) – Norwegian companies expect economic growth to slow in the coming six months, a central bank survey showed on Tuesday, driven by high inflation, capacity constraints and expected higher interest rates dampening demand.
“Constraints have become increasingly widespread across all sectors in the course of spring, except retail trade where somewhat more enterprises now have spare capacity,” Norges Bank said in a statement.
The quarterly survey provides key input to monetary policy. The central bank has said it would most likely raise interest rates on June 23, with a string of more hikes to come.
More than six in 10 businesses surveyed reported full capacity utilisation in May, the highest share in almost 15 years.
Contacts surveyed raised their estimate for annual wage growth in 2022 to 3.9% from 3.7% in February, above the central bank’s latest forecast of 3.7%.
“The report underlines that Norges Bank has fallen behind the curve,” analysts at Handelsbanken said in a note, adding it still expected the central bank to increase its key policy rate by 50 basis points next week.
The survey suggests the economy is under high pressure and in need of higher rates, analysts at Nordea said in a note, but added the higher wage expectations were “nothing major” and did not imply that a 50 basis point rate hike was needed in June.
“Overall, this report also points to an upward adjustment of the rate path next week,” Nordea said.
(Reporting by Gwladys Fouche, Editing by Victoria Klesty and Alison Williams)
Inflation is the rate at which the general level of prices for goods and services rises, leading to a decrease in purchasing power.
Monetary policy refers to the actions taken by a country's central bank to control the money supply and interest rates to achieve macroeconomic objectives.
Economic growth is the increase in the production of goods and services in an economy over a specific period, typically measured by GDP.
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage of the amount borrowed or saved.
Capacity utilization is a measure of how much of a company's potential output is actually being used, indicating the efficiency of production.
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