Headwinds from all sides

It sounds bleak, but perhaps Bergen is better equipped than other regions to deal with the economic downturn.

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We’re expecting a big one The slowdown in the global and Norwegian economy. This also means that it will get worse before it gets better. Now all you have to do is put on your winter clothes!

As a new bank manager in Bergen, I sometimes wander to the far end of the Nordnes. Even with a tight all-weather jacket and hat on, I can feel the wind ripping through the roof. Here it feels like it’s blowing from all sides. It will also feel about the same in the Norwegian economy next year.

Rising prices both in Norway and in the rest of the world is the biggest concern. It’s not that higher rates alone are so bad, but because rising rates mean higher interest rates. So far, the central bank has set its main interest rate at 2.5 percent. An increase in interest rates is expected in November. The market expects a central bank interest rate of just over three percent in the new year, which means the mortgage interest rate is around 4.5 percent.

First results We see the interest rate rising in the housing market. According to Eiendom Norge Housing prices in Bergen fell by more than three percent in September. Unfortunately, this trend will continue before it gets better. We also see it in the cottage market, as the number of cottages for sale in popular areas such as Voss and Kvamskogen is starting to increase. In the long run, this means that prices will fall.

At Danske Bank, we expect a 2% decline in the nationwide housing market in 2022. This may sound insignificant, but after many years of growth, this decline will stall a lot of the activity we’ve seen. For a population that collectively suffers from one of the largest debt burdens in the world, things will feel tighter than usual in the run-up to the Christmas holidays.

Also Bergen’s business community You will have a hard time in the future. In recent weeks, I’ve had more and more anxious business managers in my office. They are not sure what winter and next year will be like. The statistics support the concern. Came last week Survey of recent NHO members. It shows that nearly half of the NHOS member companies expect the market situation to deteriorate over the next six months. The Westland region is also no exception, although ours is less pessimistic than the rest of the country.

The most worrying thing is that it will get worse before it gets better. Interest rate increases are not yet fully in place. Just about six weeks after the central bank raised interest rates, interest rates for businesses and individuals have risen. Feel free to add two more months before we see the full impact of the interest rate hike. In addition, we expect global headwinds to become stronger throughout the winter. This means that we expect to see a recession already early next year, and thus two quarters of declining growth.

Our estimates indicate that the year 2023 will end on a positive note Gross domestic product– Cormorant growth 0.9 percent. For economists, this lower growth forecast means increased uncertainty and higher unemployment.

So what is the advice? Which companies will be tougher? The first and most important thing is to control the liquidity. What are the upcoming payments and payments. Does the company have the cash to support the company’s future image? Did you receive payments from your clients on time?

The next point is to cut down on unnecessary expenses. Next, the company must ask itself whether the debt has been improved? Are there any expensive loans that can be refinanced?

In addition to covering the basic requirements of operation, one should always evaluate what can and should be done on the income side. with The inflation we see today, it means a completely different cost structure for goods and services. Can you adjust prices without losing customers?

Although there is a look Dark, Bergen is perhaps better equipped than other regions in Norway to deal with an economic downturn. Bergen is blessed with strong industries that are used in harsh weather. In particular, there is great activity in the marine industries. The seafood industry is somewhat in a vacuum because it is uncertain how the new tax regime will affect investment and further development.

However, there is reason for some optimism. Bergen has shown great ability to deal with national and international fluctuations in the economy.

Bergens in bad weather are Bergens at home.