Russian Tensions To Benefit This Country ETF

norwayNorway, an often overlooked European investment destination, is known for crude oil production. Despite being the world’s fifth largest oil producer and second major natural gas exporter after Russia, the country is yet to get strong footing on overall growth.

Nonetheless, Norway has recently drawn enough investor attention thanks to the long-stretched, gnawing geo-political tension between Russia and the West on the Ukraine issue.

Europe is highly energy-dependent on Russia, from where it imports about 40% of its energy requirements. This dependency has made it difficult for Europe to go against Russia completely.

European leaders are diligently planning to increase their energy supplies from other nations, and Norway is a possible solution as a long-term source of oil and gas supplies with which the continent shares an affable relation.

Even if the Russia-factor is ruled out, Norway is poised to benefit from higher natural gas demand from Europe if the continent seeks to attain its ‘decarbonization’ target of 85–90% by 2050, as per Statoil natural gas senior vice president.  The target would involve lower usage of coal and higher usage of natural gas (Read: 3 Incredible ETF Buys Under $20).

Norway Economics

Beyond geopolitical issues, as per Bloomberg, Norway’s central bank has maintained its benchmark interest rate at 1.5%, with no plan to raise the key rate until the “summer” of 2015. The nation has manageable public debt to GDP ratio (29.5% in 2013) which is an impressive number in the European bloc.  The country does have some issues like huge consumer debt and a sagging housing market, but any spike in the oil sector will likely give the nation a much-needed boost.

Also, investors should note that since two-thirds of this export-oriented country’s goods go to Europe, its economy will profit from Euro zone recovery.  The economy expanded 2% in 2013 after growing 3.4% in 2012, per the Bloomberg data.

The central bank slashed its growth forecast for this year to 1.75% from 2% predicted in December. However, even after the downward revision, this energy-rich nation boasts a better growth rate than many of its European cousins.


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