In some business sectors, unemployment remains very high. Other sectors have been shielded. Interest rate cuts have given households more money to spend. At the same time, there were fewer opportunities for them to spend it. So while some have faced a precarious job situation, others have used the occasion to save. We see the same impact and uneven effects in a number of other advanced economies. 3  NORGES BANK  Chart 2 Many countries have been harder hit than Norway  ECONOMIC PERSPECTIVES 18 FEBRUARY 2021 Total COVID-19 deaths per 10 000  GDP growth, percent  UK Italy US Sweden Japan Norway 0  5  10  15  20  Souces: IMF, OECD, OurWorldInData.org, Statistics Norway and Norges Bank  Many countries have been hit harder than Norway – in terms of both economic and health effects (Chart 2). The differences reflect in part how quickly countries locked down and put a brake on the first wave of infection. The design of support measures, organisation of the health sector and structure of the economy have also played a decisive role. In countries with a rudimentary welfare system and a large informal sector, the pandemic has had serious consequences. Unfortunately, 2020 proved to be the year when the global poverty rate showed a renewed rise. THE WAY AHEAD Pandemics are watershed events that leave behind long-lasting scars. They have claimed a multitude of lives through history.
Yet as long as the crisis is ongoing, an expansionary monetary policy will be needed to stimulate the economy. This reduces the risk that unemployment becomes entrenched at a high level. At the same time, persistently low interest rates entail a risk of a build-up of financial imbalances. In Norway, rapidly rising house prices and further household debt accumulation pose a particular risk. Once there are clear signs that economic conditions are normalising, we will again seek to normalise the use of instruments – as we did after the financial crisis in 2008 and after the oil price fall in 2014. 11  SUBSTANTIAL TRANSFERS FROM THE GOVERNMENT PENSION FUND GLOBAL  NORGES BANK  The monetary policy stance in the period ahead will be influenced by the timing and means of fiscal policy normalisation. Here the authorities face a difficult balancing act. ECONOMIC PERSPECTIVES 18 FEBRUARY 2021  On the one hand, the crisis is not yet over, and there is uncertainty regarding infection rates and the progress of vaccination. Against this background, the Storting (Norwegian parliament) has decided to extend the extraordinary support measures aimed at both individuals and businesses until September. At the same time, it is important that the support measures are scaled back as the situation becomes more normal. If these measures are extended too far into the future, we risk impeding necessary business restructuring. Workers may miss out on opportunities to seek new jobs, and unemployment may become entrenched at a higher level than prior to the crisis.