Norway sitting pretty as economy rides out worldwide economic downturn

Monday, March 23, 2009

Europas største bank mener den norske kronen seiler opp som den beste valutaen å eie.

Lots of articles out there right now about how Norway's sound economic policies (and having oil of course, but this is well-managed oil, a key difference) have kept it afloat even during a difficult world economy. This sounds like a good time to strengthen the language too. If the economy's doing well and the currency is up, why not have the government set up a few Norwegian schools overseas a la Goethe-Institut in countries that might be interested in learning the language and immigrating there? Countries have to take advantage of these high-water periods where they have the opportunity to significantly increase their influence.

First article is from the Financial Times about how the Norwegian model is the "future of capitalism":
The world should consider adopting the Nordic approach to capitalism and learn from the region’s response to its financial and economic crisis in the 1990s in the attempt to stave off recession, according to the chairman of two of Europe’s biggest companies.

Jorma Ollila, chairman of Nokia, the mobile phone maker, and oil major Royal Dutch Shell, said the Nordic style of capitalism was characterised by openness to globalisation balanced by strong government programmes to protect people from its excesses and an egalitarian education system.

In an interview with the Financial Times, Mr Ollila said: “What is the future of capitalism? In one way or other the answer is to solve these issues that the Nordic model does well. These are the ingredients. The Nordic model has a good bid [to be the best system]”.
He said Nordic politicians in the 1990s showed “a lot of wisdom” and did not resort to protectionism while taking risky decisions. Companies, including Nokia, restructured heavily and made themselves highly competitive, said Mr Ollila.
By the way, this is about as close as you can get to my idea of a perfect system - I'm both left and right-wing in that a) I think certain key institutions (health care, education, etc.) should be 100% funded by the government but that b) protectionism and anything else (aside from sound regulations of course to prevent things like short selling - see the uptick rule) should be avoided as much as possible to let the market move on its own accord.

Second article: the Norwegian krone might become the new safe haven currency now that the Swiss franc has been weakened:
So where do currency investors turn now? One answer could be Norway.

David Bloom at HSBC says "The ultimate haven currency in our view is the Norwegian krone. "It's probably the best currency in the world."

This might seem surprising. Only last December the krone dropped to a record low against the euro, as falling oil prices took their toll on the currency. But, as crude prices have stabilised, the oil producer's currency has fought back strongly.

Indeed, the krone is one of the few currencies that has outperformed the dollar so far this year, rising more than 3 per cent to NKr6.694. It has soared 11 per cent to NKr10.925 against the euro.

Mr Bloom says: "The Norwegian krone is our preferred major currency and we expect a sustained appreciation over the next 18 months."

Analysts say on a number of measures, the krone is near or at the top of the league among the world's 10 most traded currencies.

Norway's economy grew 1.3 per cent in the fourth quarter of last year and is not forecast to experience as big a downturn as most other leading economies this year.

Monetary policy is also supportive of the krone, with the Norges Bank, Norway's central bank, like those in other commodity-producing countries such as Australia and New Zealand, not expected to resort to quantitative monetary easing to boost inflation expectations. The country also has a large current account surplus.

There's also an article on much the same subject here, and another one here in Norwegian.


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