Despite interest rates at their highest for 15 years, the Norwegian mainland economy (excluding energy and shipping) remains slightly expanding, at +0.1% compared to the previous quarter. This is the third consecutive quarter of growth in an economy that continues to be driven by consumption, thanks to a booming labour market and the resulting strong wage growth (up nearly 6% year-on-year in the last quarter of 2023).
This sustained demand, combined with the weakness of the Norwegian crown, which makes imported products more expensive, worries the local central bank, the Norges Bank. The ECB is therefore not anticipating a decline in Norwegian policy rates in 2024.
It is true that in July, the main inflation index rebounded towards 2.8% against 2.6% in June. However, the interest rate reductions that are being announced elsewhere should give the Oslo authorities the necessary leeway to reduce the reference interest rate in turn without affecting the Crown.
Strong thanks to the enviable financial situation of Norway, and with an AAA rating that is rare nowadays, Norwegian government bonds remain attractive as a diversification. With a higher yield than the euro area AAA, there is also a currency which is significantly undervalued and therefore has interesting upside potential.
They integrate our neutral and defensive portfolios.