Prospects for growth in the Norwegian economy are dimmed even as the market for crude oil continues to improve, the government said Thursday.
“The downturn in the Norwegian oil industry continues, despite an appreciable rise in oil prices from the bottom level in January 2016,” the government’s statistics office said.
Crude oil prices are holding just below the $50 per barrel mark, up more than 80 percent from the low point for the year. The recovery comes as global economic growth continues a slow pace forward at the same time that production from some markets fades under the pressure of low oil prices, which are still about 50 percent less than levels from just two years ago.
Statistics Norway said demand pressures on the petroleum industry started to wane at the end of 2013, which triggered the downturn in crude oil prices. That, in turn, put negative pressure on the Norwegian economy, which as a main oil and gas exporter to the European market relies heavily on the industry for revenue.
Mainland gross domestic product for Norway increased by about 1 percent last year and the government said lower growth is expected this year.
“The oil downturn, and particularly the sharp drop in oil investments, thereby implies considerable negative impulses for virtually all industries throughout the country,” the government said.
The Norwegian Petroleum Directorate, the nation’s energy regulator, said oil production in April, the last full month for which data are available, averaged 1.63 million barrels per day, about 3 percent higher than the agency had expected and about 4 percent higher than last year.
Early this year, the NPD said industry investments are expected to remain suppressed through the latter half of the decade, with levels expected to hold at around $22.5 billion for the next few years before a moderate uptick by 2019.
Statistics Norway said the price for crude oil will stay relatively even at around $50 per barrel, recovering only to around $60 per barrel by the end of the decade.
“We therefore expect that the decline in petroleum investments will be curbed going forward, but the decline in the annual average may still surpass 16 percent in 2016,” its report read. “After stabilizing through 2017, investments may increase slightly in 2018 and 2019.”
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