Economic trends for Møre og Romsdal

The economic outlook in the county of Møre og Romsdal is, like in the nation generally, characterized by Norway being still in a roughly cyclical neutral situation and that the upturn we have seen since the beginning of 2017 is expected to level out and probably be over during 2020.

The growth in petroleum investments over the past three years has helped to lift the Norwegian economy. Delays and increased scope of work on some development projects have generated even further investments which mostly is expected to be realized in 2020, but that completion and phasing-out of development projects is expected to result in a decline in petroleum investments the next year.

In 2019, business investments were characterized by strong growth, significantly higher than the trend growth in the economy. However, the deposition in the international economy will mute the investment growth so that business investment in the mainland economy is expected to be slightly lower in the current year than in 2019.

The Norwegian krone has depreciated over the past months and energy prices have fallen. This improves, in isolation, the profitability of export-oriented enterprises, but the profitability in the current and next year will still be marked by a downturn in the international economy. With continued relatively low interest rates and positive real income growth, the increase in household consumption is projected to stay high both in the current and next year.

A slight production growth of the primary industries in Møre og Romsdal is expected to continue in the current and next year. Manufacturing production of the country generally is still expected to grow in the current year, so also in Møre og Romsdal, but slightly weaker than last year. Production in construction is expected to remain at a high level. Production in market-based services is still expected to rise, slightly lower than last year, while production in public services continues to increase, slightly higher than last year. The projections also show clear production growth in industries such as extraction of crude oil and natural gas, services related to oil and gas extraction and pipeline transport. The growth of total gross product for all industries is expected to increase in the county both in the current year and next year, albeit slightly lower than in 2019.

Møre og Romsdal had a clear increase in total employment in 2019, with increased employment in manufacturing, construction, market-based and public services, but also in several other industries, such as extraction of crude oil and natural gas and pipeline transport and services related to oil and gas extraction. The estimates show a slightly more moderate employment growth in 2020 than last year, with continued employment growth in primary industries, manufacturing, construction, market-based and public services, as well as in parts of what we call other industries.

 

The employment growth in Møre og Romsdal is expected to remain at about the same level as in the current year also next year, with an expected increase similar to that project for the country as a whole. There is still expected some growth of employment in the primary industries, manufacturing and public services, as well as in some other industries including production and services associated with the petroleum sector, while small changes are expected in the employment of construction and market-based services.

Increased aging and more immigrants of working age are, in isolation, contributing to a reduction in the labour participation. But a slightly higher level of education in the population and continued growth of employment, nonetheless leads to some growth in the labour force. We expect the labour force to increase roughly in line with the employment the current year, which means small changes in the unemployment.

Preliminary figures at the beginning of this year show continued increase in the population of Møre og Romsdal in 2019, but slightly lower growth than the previous year. There is still a birth surplus in the population, while negative domestic net migration and positive net immigration overall contributes to a slight decline in the population. Net immigration to the county has fallen annually since the record year of 2012 and was in 2018 at its lowest registered level since 2005. However, preliminary figures indicate that there was a further fall in net immigration in 2019. Preliminary figures show that net domestic out-migration from the county was at the same level in 2019 as the year before, which is somewhat lower than in 2016 when the county experienced the highest domestic net out-migration since 2006.

A moderate growth in the population is expected to continue, while small changes in the number of persons of working age are expected, where the number of younger and middle-aged persons are declining, while the number of persons above the age of 50 is increasing. The projected development of the labour force and employment indicates small changes in unemployment in Møre og Romsdal in 2021 as well.

In January this year, information came out that an infectious influenza virus called the corona virus was spreading in China and then gradually moving to other countries in February and March. This has resulted in clearly lower activity in the international markets, where global supply chains are affected both in terms of input factors and finished manufacturing products, but also in several activities in the service industries. Oil demand has clearly decreased, so too the petroleum price, and contributed to a further decline in the value of the Norwegian krone.

This report is based on cyclical trends for the Norwegian economy as of December 2019 and the assumptions are based on a situation before the corona virus became known. The projections may therefore prove to be too optimistic for the current year if it is not possible to reduce the economic impact of the virus in the relatively near future.