After Netherlands & Germany, Europe's top economy 'Norway' suffers due to zero growth

Oslo: Norway, the owner of the world’s largest ‘sovereign fund’ (investment fund) and Europe’s top economy, has been harmed by zero per cent growth. In the second quarter of 2023, Norway’s economy registered zero per cent growth due to the decline. Norway’s economy recorded a growth rate of 0.2 per cent in the year’s first quarter. Rising inflation, rising interest rates and the negative performance of the real estate sector are considered the reasons behind the new economic downturn.

For the last few days, information about a slowdown in the pace of Europe’s top economy has come to the fore. Germany, Europe’s largest economy, recorded a zero per cent growth rate in the second quarter of 2023. Before that, it was clear that the economy of the Netherlands was in the grip of recession due to two consecutive quarters of negative performance. After this, Norway was also included in it, and this incident confirmed the phenomenon of a shrinking European economy.

Moreover, Norway is an export-oriented country, and its share in the ‘GDP’ of the fuel energy sector is more than 20 per cent. The fuel imports of these two countries were damaged by the background of the Russia-Ukraine conflict. Due to this, the demand and price of fuel in Norway have skyrocketed. As a result, Norway has benefited significantly. Yet, an inflation boom has started during this time. The general inflation index in the European Union has been recorded at 5.3 per cent. However, inflation continues to rise in Norway, and the inflation index has reached 6.4 per cent.

To control the rising inflation, the Central Bank of Norway has increased the interest rate 12 times in the last two years. At present, the interest rate in Norway has reached 3.75 per cent. On the other hand, the value of the Norwegian currency, the Krone, has declined and affected imports. Norway’s real estate sector also seems to suffer due to interest rate hikes and currency changes. House prices in Norway have risen in the last few months, and there has been a big drop in demand.

The Norwegian government, the country’s central bank, and other major banks have predicted a decline in the country’s growth rate in 2023 and 2024. The country is not in an economic crisis, yet the recession will continue for months, say top banks. In June, the recession harmed the Eurozone, a group of 20 European countries. This would affect other European countries, the analysts had claimed then.

European customers have lost their financial power due to the rise in inflation and interest rate hikes by the Central Bank. Due to this, the products, real estate and retail sales of European countries have been damaged. Therefore, the possibility of European countries coming out of this situation soon has reduced, and a recession-like condition will prevail in 2023, economic experts and analysts warn consistently.

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