Further moderation in Norwegian GDP growth is expected in Q3, to 0.1% q/q. Norway's near-term growth outlook remains vulnerable. Oil investment is expected to fall further, and less demand for goods and services from the petroleum sector will likely reduce activity in other parts of the economy.
The Norges Bank is not expected to react to additional ECB stimulus, but a 25bp rate cut is expected in the next 3-6 months should growth moderate further. Despite the grim short-term outlook, expansionary fiscal and monetary policies in Norway should help stabilize growth.
"We see EURNOK depreciating to 9.20 by year-end and trading modestly lower, to 9.00, by Q4 2016", says Barclays.
