Norway’s economy is experiencing growth, mainly because of the relatively high prices on crude oil from the North Sea. The oil and gas sector provides huge tax revenues and the £40bn in financial funds the Norwegian government holds abroad enables it to stabilise the economy.
The main challenge is to keep inflation under control. The result is a basic interest rate of 7% and a strong Norwegian krone – conditions that are not favourable for traditional export-oriented and import competing processing industries.
Even though the Norwegian sawmilling industry’s profitability last year was the best since 1994, the situation is unsatisfactory. Exchange rates, especially in relation to the Swedish krona, have changed dramatically since mid-2000 and the effect on competitiveness on export markets is obvious. However, because around 70% of production is sold on the domestic market, competition from imports is a severe threat as well. So far the high and increasing activity in the domestic building sector has compensated for the difficulties in the export markets.
Before September 11 the forecasts for the domestic building sector were still promising, indicating a further increase by 4% in 2001 and the same next year. Now the future is uncertain. However, even before September 11 forecasts for sawn softwood exports for 2002 were pointing downwards.
Germany, Holland and the UK are the most important markets for Norwegian sawn softwood. Exports to Germany and the UK went down (28% and 21%) in 2000, a trend that has continued in Germany but stopped in the UK. However, export figures for Holland are down 29% compared with the same period in 2000. The development in Belgium and France is positive, but from too low levels to compensate the negative main trend.
In some countries it is thought that the effect of September 11 on people’s priorities could lead to increased DIY activities – and the impact on softwood consumption could be significant.
This year the first Norwegian sawmill obtained PEFC chain of custody certification and it is likely that the larger sawmilling companies will follow soon.
Most of the Norwegian productive forest area, dominated by private ownership, is already PEFC-certified. The speed and extent of chain of custody certification will be a question of demand from customers and end-users.
