The Norwegian economy and hence also the NOK is in the process of adjusting to a new normal, with the ongoing and rapid decline in crude resulting in a sharp adjustment of the capital spending plans in the off-shore industry from 2016 onwards. With oil & gas investments having been a key driver of strength also in the mainland economy over time, these revised investment plans means a more bearish outlook also for the onshore economy. Indeed, simply looking at the current oil & gas investment forecasts from the Norwegian Stats Office, which were made a couple of months ago, and they would imply a noticeable slowdown in mainland GDP growth in 2015 and 2016 to 2% or below. This is consistent with an ongoing deterioration in manufacturing sentiment, with Norges Bank’s “Output Growth over the next 6 months”, a sub-component of the Bank’s key Regional Network Survey, currently at its lowest levels since early 2012.
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