In this case, you will get an answer to: What can be more expensive and cheaper? What happens to the interest? What should you do with savings in funds and shares? Do the economists have any other advice? How can the fall in the stock market affect the wallets of Norwegians? Alexandra Morris, investment director in Skagen, does not think that the stock market crash last week, where the unemployment figures from the USA rose more than expected and large values were lost, has such a big impact on Norwegians in the short term. It is certain that it will continue for a long time, and we are going into a recession, that one can worry about bad times, according to Morris. Then Morris says that you will notice that people are afraid and more reluctant to spend money, which will affect companies that offer various services and goods in Norway. There have been stock market falls in several places around the world this week, including in Norway. Why does it happen and what does it mean for you? Sindre Heyerdahl is an economic commentator on E24, nor does he think that Norwegians will feel the fall in the stock market right away. The stock exchanges and many other investments have gained a good deal since then. It is also not so certain that the unemployment figure was as bad as feared either, according to the economist. – The fall in the stock market increased fears of economic decline. There was an excessive sale of shares and many people panicked, he says. Now a few days later, it is still bad, but not so bad if you believe Heyerdahl. – It is good to emphasize that there is not quite as strong a panic now as there was a few days ago. But if the fall in the stock market lasts for many months to come, the economist believes that it could weaken the krone. What kind of goods and services can be more expensive? A great deal of what we need in Norway is imported. This applies to, for example, electronics, clothing, foreign food and toys. Morris says that the goods Norway imports are already expensive because the krone has weakened, for example, against the euro, dollar and the Danish krone. – If Norges Bank keeps interest rates at their current level, while the USA and the EU lower interest rates, the difference in interest rates will make Norwegian kroner more attractive to international investors. This can strengthen the krone, reduce imported inflation, and perhaps even lead to deflation. But if prices continue to rise, and inflation becomes higher, it becomes more expensive to go to the shop or to a restaurant. Terje Pedersen / NTB Krone exchange rate The krone exchange rate shows how many units of foreign currency we get for one Norwegian krone. For example: For 1 Norwegian krone you can get 0.63 Danish kroner. A strengthening of the krone means that you get more units of foreign currency for one Norwegian krone. Conversely, a weakening of the krona means that you get fewer units of foreign currency. Emilie Holtet / NTB Inflation When the prices of goods and services rise over time, it is called inflation. If prices fall over time, it is called deflation. If the wage increase one year is 1 per cent, and inflation is 2 per cent, we have less to trade for. Purchasing power determines how much prices rise in relation to wage growth. You usually get more purchasing power if your salary increases more than the prices in society. Stian Lysberg Solum / NTB Interest rate Both inflation and the krone exchange rate can be affected by the policy rate. Interest is the price for borrowing money. The interest rate affects how much people can use for consumption and investments. Noregs Bank sets the key interest rate. The interest rate can be used to maintain a stable level in the Norwegian economy. When the key interest rate goes up, people normally have to pay more on, for example, their mortgages. Gorm Kallestad / NTB How is it connected? A low krone exchange rate leads to more inflation. Most goods become more expensive and it becomes more expensive to shop abroad. The central bank tries to adjust price inflation by setting interest rates up and down. When interest rates are high compared to other countries, it can be more beneficial for foreigners to invest money in Norway. And when more people buy kroner, the krone exchange rate rises. What will Norges Bank do with the interest rate beyond the autumn? Heyerdahl does not believe that Norges Bank will lower interest rates anytime soon, even though it is constantly being forecast that interest rate cuts are just around the corner. He therefore believes that it may be okay to spend money with the expectation that there will be no interest rate cut. – Most likely, I think we will first get an interest rate cut in Norway next year. Morris agrees with his colleague. – I don’t think the central bank wants to lower interest rates until inflation is under control and the economy has cooled down more. Only then does she think that central bank manager Ida Wolden Bache will reduce the interest on your loans. In the US, an interest rate cut in September from the US central bank is predicted. Most people now believe that there will be at least two interest rate cuts in the same period. This means that you cut by 0.5 percentage points, and not just by 0.25 percentage points. What is also called a double interest rate cut. Advice on what you can do with savings in funds and shares Don’t panic! This is the advice of several experts. Morris advises those who can afford it to buy shares. – When the stock market falls, it usually gives reasonable entry prices, she says. This means that it is cheaper to buy shares now than it was a few weeks ago. If the shares you already own, the economists say that you should have ice in your stomach. – It is the case that most people who invest in funds and shares think long-term, says Heyerdahl. – And then you don’t need to be nervous at all now. Especially not in funds, because it is the case that stock markets fluctuate, and at irregular intervals there will be strong stock market falls. – So they can sit back and think that this will pass, this too, he says. Other advice from economists: – I would recommend on a general basis that people set up monthly savings, says Morris. Set aside a reasonable amount that you don’t need, a sum that goes into an account when you get paid. The sum for both economists must be one you can afford, so that you are not constantly withdrawing from the savings account. Morris also recommends having savings in hand for a rainy day – Have some extra money in your account for unexpected expenses. It is always advantageous to build a buffer. Should it turn out that the fall in the stock market is the start of a period of decline, then one should always be careful with too many home loans, says Morris. Heyerdahl says that one should not be afraid to take out loans now because the stock market fall may worsen, but he recommends thinking about how much one takes out in loans. – There is a tendency for people in Norway to often pay off their housing loan, it might be a good idea to try to hold on a little longer. Then Heyerdahl believes that one is better equipped for all possible economic outcomes. Published 08/08/2024, at 22.36 Updated 08.08.2024, at 22.48
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This means the stock market crash for your wallet – news Norway – Overview of news from different parts of the country
