Finance Norway's quarterly expectations survey released on Wednesday revealed a resoundingly glum outlook.
“The main indicator in this quarter is the third lowest ever recorded in the barometer's history. We have to go back to the banking and housing crisis in the early 1990s to find two consecutive quarters with lower readings,” according to Finance Norway.
Finance Norway and TNS Gallup have measured Norwegians's economic expectations and outlook since 1992.
The main image in the survey for the second quarter is that Norwegians are still pessimistic. At the same time, however, the survey reveals a split image.
“A weaker exchange rate and expansionist economic policies have to some extent offset cuts in investment and staffing in oil-related businesses. This has led to greater faith in the country's economy,” Finance Norway CEO Idar Kreutzer said.
“At the same time the barometer shows that households are somewhat more uncertain about their own financial situation,” Kreutzer added.
Weak growth - increased unemployment
The Norwegian economy currently faces several challenges.
Oil prices have fallen from $ 115 a barrel in summer 2014 to $44 a barrel today. Along with an expected decline in oil investments, the price drop has led to a distinct decline within the oil and gas industry.
This has resulted in sluggish growth and an unemployment rate that has risen continuously for two years. New figures from Statistics Norway (Statistisk Sentralbyrå - SSB) show that 4.6 percent of Norwegians are now without work.
“The latest quarterly report from NHO [the Confederation of Norwegian Enterprise, ed.] shows that falling oil investments now also been felt beyond Southern and Western Norway. Oslo and Akershus are now beginning to approach the same negative market outlook that businesses in Western Norway have experienced,” Kreutzer said.
The Finance Norway CEO believes that signs of the crisis's spread are now making Norwegians' worries about job security the top reason why households, according to the barometer, are more uncertain about their own finances over the next year.
“A steady job and stable income are the cornerstones of private economy. Uncertainty about this makes people more cautious, reducing consumption and increasing savings. In this way the downturn is reinforced and we risk getting into a vicious cycle with accelerating unemployment,” he said.
It is primarily Norwegians who do not have advanced educations who are bringing down the barometer's main indicator. This group has seen unemployment rise the most.
The barometer also shows that while savings are falling somewhat, levels still remain historically high.