– E24 – can be a bubble starter

Statistics Norway sees weaker growth prospects internationally, which may also extend to Norway. – There is a lot on the agenda that we do not see the impact yet. It’s a little scary, says the SSB researcher.

Statistics Norwegian researcher Roger Hammersland confirmed that there are significant negative risks associated with international developments, which could in turn affect the Norwegian economy.

– In the event that central banks make a drastic move on gas, so that interest rates rise too much or remain high for a long time, it is clear that this may have negative effects on the financial market, he told E24, after Statistics Norway presented a new forecast for the economy.

– We’ve already seen a number of bankruptcies, and it’s likely we’ve only seen the beginning of something boiling on the surface, he adds.

Central banks abroad and here at home have dramatically raised interest rates in the wake of record low interest rates during the pandemic.

The United States was among the most aggressive with an interest rate of between 5 and 25.25 percent, but now it is cutting interest rates. The Bank of Norway has an interest rate of 3.25 percent, but it is likely to raise it to at least 3.50 percent on Thursday.

– A bit scary

Hammersland points out that it takes some time to see the impact of higher interest rates on the economy.

– So, there’s a lot more in the pipeline and we don’t see its impact yet. He says it’s a little scary.

He’s not sure how much that has been taken into account by the exchanges.

– Now I think a lot is paid artificial intelligence or artificial intelligence (artificial intelligence), good vibes about GTP chat and all that. It tends to look like a dotcom bubble, I think.

There are very few companies leading this development, Hammersland notes, and mentions Nvidia, among others, which has risen nearly 200 percent on the US stock market since the beginning of the year.

– while among others we see a more cautious development. So it’s very driven by these AI companies right now. I’m a little concerned about this, because it could be the beginning of such a bubble, though I have to be careful about using that word, he says.

– keeps stumbling

The researcher also highlights two other risk factors at the international level. The first is the US commercial real estate market.

– It keeps getting stuck, which is a little scary, because there are especially many regional banks that lend a lot of commercial real estate in the US, he says.

The recent rise in interest rates both abroad and at home is increasing risks in this sector. Finanstilsynet also specifically warned about this here in Norway in its latest report on vulnerabilities in the financial sector.

Another thing that worries Hammersland is Europe’s banking sector. He recalls that the eurozone, that is, the countries that use the euro, have recently joined recessionrecessionIt means a downturn in the economy, defined technically by two consecutive quarters of decline in Gross Domestic Product (GDP).

There are also far too many indications that the US will eventually enter a recession, he says, and stresses that US unemployment has never been so low without a downturn.

The recession in the United States will also spread to Europe. In addition, Hammersland mentioned the war in Ukraine and weaker growth prospects in China.

Of course, it will also be negative for the international economic outlook, especially in the short term.

– It affects us through exports

– How vulnerable will the Norwegian economy be if things go very wrong in the world around us?

– First of all, it depends on how bad things are. If we want to get a normal one recessionrecessiongrowth less than normal (trend/average)Then it will affect us through exports, because the countries around us import less.

– But if a financial crisis occurs, it will also spread to Norway. Even if central banks cut interest rates next, market interest rates may continue to rise, lending standards will be tightened and this will affect the ability to obtain loans, which will affect the entire economy.

What do you think could lead to a financial crisis now?

– I’m a little afraid of what is happening in the United States, and maybe even more so in the European banking system. I think it was scary that Credit Suisse went bankrupt and was taken over by UBS.

– We do not quite know what happened there, why it happened. It gives me a slightly nasty feeling that something is bubbling under the surface, of which we have no idea of ​​the consequences. I think that’s scary.