Impact of COVID-19 on Norway Economy Size, Growth & Industry Report to 2025

Norway is a developed mixed economy as most of the industries in the country have state ownership in strategic areas. The country has an important role in the export of goods and services in European countries. As per the European Commission, the country is the sixth most crucial partner of EU for goods trading, after the US, China, Switzerland, Russia, and Turkey. Nearly 74% of Norwegian exports go to EU countries. The country is rich in natural resources, such as minerals, petroleum, hydropower, forests, and fish, and is extremely relied on oil production and global oil prices.

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Norway is among the top seven crude oil exporters across the globe. 18% of the country’s GDP and 62% of its exports was led by the oil and gas sector in 2018. Among Western European countries, Norway is among the most important source of natural gas. In 2018, Norwegian gas held nearly 31% of EU gas imports. UK, Germany, France and Belgium are the major EU importers of Norwegian gas. As a result, the oil and gas industry is the major contributor to the growth of Norway economy. However, the country’s oil and gas sector is affected by the COVID-19 pandemic. The virus has pushed oil and gas companies to halt or slow physical operations, which in turn, is affecting production in the upstream sector.

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As a result, the reduction in investment in oil and gas production were reported in the country. For instance, Equinor presented $3 billion action plan to reinforce the financial stability in a market affected by low commodity prices and COVID-19. The action plan for 2020 includes reducing organic capital expenditures from $10-$11 billion to nearly $8.5 billion and decreasing exploration activity from nearly $1.4 billion to nearly $1 billion. In addition, it reduces operating costs by nearly $700 million across 2020. Due to this, onshore drilling and completion operations of the company may bedelayed. Equinor is one of the major local players in the oil and gas sector in the country and reduction in the investment in oil and gas production activities will affect their revenue generation and exports to other countries.

The Norwegian government is providing relief through certain support measures. For instance, on 15th March, Norwegian government declared that it would provide companies minimum $9.7 billion in funding in the form of bond issues and guarantees for loans to support the economy during the COVID-19 epidemic. These initiatives may support to reduce the risk of unemployment and shut down of businesses in the country. Further, on 13th March, the country’s central bank, Norges Bank reduce the policy rate to 1.0% from 1.5% amid coronavirus outbreak in the country. The bank also declared that it will provide exceptional three-month F-loans so long as deemed required which will be completely offered at an interest rate equal to the prevailing policy rate. Such initiatives are anticipated to support the policy rate and money market rates coupled with the increasing significant volatility in the financial markets.

Some crucial companies getting affected by COVID-19 pandemic include Equinor ASA, Statkraft AS, Telenor ASA, Tryg A/S, and Norwegian Air Shuttle ASA. On 10th March 2020, Norwegian Air Shuttle ASA declared that will cancel nearly 3,000 flights during mid-March to mid-June. This represents 15% of its capacity during this period as the coronavirus outbreak hits travel. This cancellation will likely affect the entire network of the airline and would implement layoffs of personnel. Additionally, on 27th March, Statkraft, Norwegian energy company hold three construction projects due to the spread of COVID-19. These projects include wind and hydropower projects in India, Chile, and Scotland.

Company Profiles

Aker Solutions ASA
Equinor ASA
Norsk Hydro ASA
Norwegian Air Shuttle ASA
Statkraft AS
Storebrand ASA
Telenor ASA
Tryg Forsikring A / S

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