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Fast Comment NorwayInvestment survey (oil & gas) confirms a stellar increase in 2019; 2020 more uncertain

  1. Stellar increase in petroleum investments in 2019; NB has already factored it in
  2. Investment growth in 2020 is more uncertain, however
  3. The Q4 survey will provide more clarity
Stellar increase in petroleum investments in 2019; NB has already factored it in
The Q3 investment survey signals petroleum investment of around NOK 181.7bn this year, which is a rise of 16 percent compared to the similar survey a year ago. The figures are nominal, so assumptions about the cost deflator must be made. The cost deflator is levelling out, which may translate into real petroleum investment also rising by about 16 percent. However, it is our experience that some of the planned investment projects for the current year will be delayed until next year. If true, the annual investment change will be somewhat lower than 16 percent. Norges Bank has forecast real petroleum investment rising by 14 percent this year. Note that petroleum investment constitutes 6.3 percent of the mainland economy (down from a peak of 9.3 percent in Q3 2013) and has an import content of about 40 percent. Thus, a deviation of more than 2 percentage points relative to Norge Bank’s growth estimate (petroleum investments) is required before it affects the GDP forecast for 2019. Taken together, the investment survey broadly confirms Norges Bank’s assumptions; it is therefore neutral for the key policy rate path. The NOK was little changed after the survey was released. The survey also provides updated investment plans for next year, which is up by about 5 percent from the corresponding survey a year ago. But the corresponding survey was plagued by a low base. A better suggestion is to compare the investment outlook for 2020 directly with the current 2019 estimate, which instead points to nominal petroleum investment dropping by about 4 percent. We note from the press statement that the sign of the investment growth in 2020 is highly uncertain. The Q4 investment survey will give more clarity, as actual investment decisions will be made later in the second half of the year.


Disclaimer

Marius Gonsholt Hov

Senior Economist

Norway

maho60@handelsbanken.no

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