The Scandinavian nation is expected to lose roughly 1 billion kroner kroner ($97 million) each day.
Norway’s economy will see a GDP decline of 8.7 percent when measured against 2019 levels, the Confederation of Norwegian Enterprise (NHO) has warned in a recent estimate.
If true, this will be biggest fall since 1940, when Norway was occupied by Nazi Germany in World War II, and GDP fell 9.2 percent, the newspaper Dagens Næringsliv noted.
“There are many uncertain factors in such calculations, but we know that the fall of the Norwegian economy will be huge in the future, even in the most optimistic scenarios”, NHO chief economist Øystein Dørum warned.
According to the NHO, Norway will be hit even harder than most developed nations, where the fall will be about 7 percent. Lockdowns, loss of income, and weaker prospects will dampen the economy, the NHO stated. Norway is expected to lose roughly 1 billion kroner kroner ($97 million) each day.
“Overall, the Norwegian economy is getting poorer. We need to raise money from the oil fund while many people go down in income and produce less than they would otherwise. Every day that goes by represents a loss in terms of lower consumption and poorer welfare”, Dørum stressed.
Norway is in for a trade-off between health considerations and economic productivity, per the NHO.
“The most important thing is safety for people’s health and that as few people as possible get sick. The second is security for people, is that they have a job to go to after the crisis. Our message is that these considerations must be weighed against each other”, Dørum said.
Per the NHO, the crisis caused by the coronavirus epidemic is “unparalleled in modern times”. The situation for Norway as a major oil producer is exacerbated further by the slump on the international oil market. Combined, these factors have already weakened the national currency, the krone, by a third.
The NHO’s member survey on 2 April indicated that about one-third of companies face liquidity challenges, while an equally high proportion fear bankruptcy.
According to the Norwegian Labour and Welfare Administration (NAV), there were at least 412,000 people in Norway “without a normal or desired connection to the labour market”, which corresponds to 14.7 percent of the workforce.
So far, Norway has seen 5,755 confirmed cases of COVID-19, with a total of 59 fatalities (the average age is 84).
The authorities have claimed that the epidemic is “under control” and pledged a gradual re-opening. According to Prime Minister Erna Solberg, several of the country’s emergency measures will be relaxed after Easter. For instance, kindergartens will open again starting 20 April, while schools for the youngest age groups will open a week later. Some businesses forced to close because of the regulations, such as hairdressers, will be permitted to re-open over the course of April.