DNB's markets with new forecasts: two interesting jumps and a little more to do in your portfolio – DNB – Macro and politics

"We expect the time to pass and that moderate growth will continue next year.

He concludes economists DNB Markets, Kyrre Aamdal and Jeanette Strøm Fjære, about the Norwegian economy in 2019, in the latest forecast report of the brokerage.

They see that our economy will grow next year:

• After an economic growth of 2.0% last year, which is expected to reach 2.3% this year, they are now forecasting growth of 2.0% next year.
• Growth in private consumption is expected to increase from 1.9% this year to 2.0% (compared to 2.2% in the previous estimate for 2019).
• Unemployment rate of 2.3% (unchanged from this year, NAV) and 3.8% (down 0.1 percentage point from this year, Statistics Norway)
• Wage growth, which rose from about 2.9% this year to 3.1% next year
• Inflation (CPI) fell from 2.8% (forecast) this year to 1.4% next year
• Oil investment growth of 10% (compared to 2.0% this year)
• An exchange rate of the euro is expected to rise from 9.60 crowns this year to 9.40 next year
• The dollar exchange rate is expected to rise from 8.1 crowns this year to 8.2 next year.

If you compare these estimates with those of the Norges Bank launched earlier this fall, you may find that the NBB expects slightly lower growth, slightly higher unemployment, but at about the same rate of inflation. and growth of oil investments than the central bank.

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DNB Markets also has new forecasts for international developments.

Broker economists believe that several factors they consider temporary in the fall have dampened global growth. As a result, they also believe that global growth will pick up in the first half of next year.

Among the factors they underline are the demand for labor from European and Japanese consumers due to rising energy prices, falling car production in Europe and especially in Germany. due to new environmental regulations (transition to WLTP standard, journal.anm.). trade dispute between the United States and China.

Interest Rates and Higher Wages

In September, Norges Bank raised its key rate for the first time in seven years, from 0.5% to 0.75%.

DNB Markets estimates that we will have two interest rate hikes to wait in 2019 and will attend the March and September Monetary Policy and Monetary Policy Meetings. Thus, they see that the key rate will be 1.25% in one year.

– The rise in interest rates will probably be gradual and slow for a number of reasons. First, the Norwegian economy is far from overheated (…) Second, the rise in interest rates in the euro area, Norway's largest trading partner, will not begin until December 2019 (…) Third, Norwegian households are heavily borrowed and even small Changes in interest rate policy can have adverse effects on interest rates and consumption, writes Aamdal and Fjær.

In parallel with the slight rise in interest rates, Fjær and Aamdal believe in the DNB that wage settlements will lead to real wage growth next year.

While the stakeholders of this year's salary bills have recorded 2.8% wage growth, the DNB estimates that the phase will finally reach 2.9%.

"We expect next year's negotiations to lead to negotiated wage growth of around 3.0%, now that unemployment is near normal and there has been growth for several years now. relatively low pay, write Fære and Aamdal, adding that they believe the parties while stressing the importance of the competitiveness of Norwegian companies.

One of the reasons that wage agreements would be better is that unemployment is low.

They indicate that employment growth has been solid, at nearly 1.5% in 2018, and that it will still exceed 1% also next year. At the same time, they point out that Nav's unemployment rates indicate that the fall in unemployment has been flattened, while Statistics Norway's unemployment figures have risen slightly in recent months.

Read more: Sees four dangers for the global economy next year

This means that they are due to the fact that the labor force has increased and not that labor market developments are weaker.

In addition, the brokerage agency expects inflation to rise from 2.8% this year (expected) to 1.4% next year.

All of this together means that most Norwegians can expect real wage growth of around 1.6% if DNB's forecast is disappointing.

PS! The reason DNB believes price inflation is going down so much is that it thinks that electricity prices will come down next year.

Housing market smothered

Although the low inflation rate and wage settlements will contribute to the growth of real wages, the housing market does not seem to give Norwegians the promise of great prosperity year-round next. At least not for those who live in the housing market.

Finanstilsynet: High and growing household debt makes the Norwegian economy vulnerable

"Interest rates should slow real estate price growth," write economists at the DNB, which predict real estate price growth in 2018 of 0.8% and 0.5% in 2019 .

However, they say that it is possible that real estate prices will eventually exceed their estimates because history shows that real estate prices are rarely stable.

After a fall in prices in 2017 and an improvement in the first half, prices have stabilized in recent months.

The case continues during the advertisement.

The economists at DNB point out that there are a large number of unsold homes on the market, although the turnover is good as many homes are being finished.

"We expect this trend to continue early next year, which combined with rising interest rates and high-rated households should dampen inflation," writes Fjære and Aamdal. .

The new DNB forecasts will also be released one hour before the November housing prices at 11 am Wednesday.

In September and October, house prices fell nominally, while the October report also indicated that house prices were 2.4% higher than those of the previous year.

A further drop in prices is expected in November.

Several worried about Norwegian debt

DNB Markets is by far the only one to think that Norwegian households are highly indebted. He also makes Finanstilsynet, which presents Wednesday a report on the financial situation in Norway.

"It is worrying that household debt continues to rise, so that the Norwegian economy is well equipped to deal with shocks that could impact the economy, it is important that the strength of the bank does not not strengthen because the financial crisis is not compromised, "said Morten Baltzersen, chief financial officer, in a statement.

Although the Norwegian economy is good, the Authority points out that high real estate prices, coupled with the high and rising household debt, make the Norwegian economy vulnerable to several risk factors.

This could be a sharp rise in interest rates, a new wave of turmoil in international financial markets or other economic shocks, which could cause a sharp decline in real estate prices and a sharp decline in demand for goods and services of households, according to the audit.

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