Economic Outlook 1/2012

illustration: frontpage for the report economic outlook

(25.01.2012) Global GDP rose by 3½ per cent last year, marginally less than the average for the last two decades. Given the many substantial shocks last year, and the worsening of the crisis in the eurozone, this is not as bad as might have been expected. Still, the growth rate abated during the course of the year.

As we enter 2012, the eurozone has probably already entered a new downturn, while growth in other industrial countries is weaker than their long-term potential. We now predict 1.3 per cent growth in the industrial countries this year, which is even lower than last year. Consequently, the industrial countries will continue to experience underutilised resources, moderate price inflation and low interest rates. The prospect of continued brisk 5½ per cent growth in other countries pulls the global average up to about 3 per cent. As in August, a collapse in the eurozone poses the biggest threat to economic growth. A possible downside scenario resulting from such a collapse is outlined in chapter 4.

Higher oil prices as a result of unrest in the Middle East and North Africa, a lack of consensus on the US budget and a hard landing in China could also threaten growth. There is, however, also a possibility that we may underestimate the propensity to invest and hire new employees among companies that over the last years have strengthened their finances and now want to expand. Consolidation after the crisis has come a long way in the USA, and demand there may pick up more than we anticipate.

We take a closer look at:

  • Global: Slowdown, but no new crisis
  • Norway: A strong, but dual development
  • Sweden: Affected by the euro zone crisis
  • Baltics: Brisk recovery in the Baltics
  • Poland: Slowing down
  • Oil markets: Further up in long term
  • Fixed income: Money market rates on the way down
  • FX: Comeback for the euro, still strong and stabile Norwegian krone

New forecasts/prognosis

Economic outlook - forecasts