Scandinavian countries launch economic virus response

OSLO, Norway – Norway and Sweden on Friday, March 13, launched a number of economic measures aimed at mitigating the economic consequences of the COVID-19 outbreak.

The Norwegian government presented measures to stimulate the economy, including immediate measures to avoid bankruptcies, and efforts aimed at both the wider economy and especially affected business sectors.

The government said the measures, which included amended rules for taxes and sick pay, would likely cost around 6.5 billion kroner in total ($654 million or 589 million euro), but Prime Minister Erna Solberg stressed that more would be added if necessary.

"Even if the measures we present today amount to many billions of kroner, it's still only the beginning," Solberg told journalists.

Measures also included suspending the passenger flight tax to help ailing airlines such as Norwegian Air Shuttle, hit hard by the fall in demand. (READ: EU to stop 'ghost flights' in coronavirus fightback)

Norway's central bank also announced early Friday it was cutting its key rate by 0.5 points to 1%.

"There is considerable uncertainty about the duration and the consequences of the epidemic and there is a risk of a pronounced economic slowdown," central bank governor Oystein Olsen told journalists.

Olsen added the bank was following developments and was "ready to further reduce rates."

'Intrusive measures' in Norway

Meanwhile in neighboring Sweden the central bank said it stood ready to lend up to 500 billion kronor ($51 billion, 45 billion euros) to companies via the banking system.

In addition to the rate cut, Norway's central bank said it would offer extraordinary loans to banks, while the finance ministry said it was allowing banks to run down capital buffers to free up liquidity.

Sweden's financial supervisory authority also proposed reducing capital buffer requirements for banks.

On Thursday evening, March 12, Norway recorded its first death from the new coronavirus, and on Friday reported 750 confirmed cases.

Sweden has also had one coronavirus death, and 775 confirmed cases.

Also on Thursday, Norway's government unveiled what it called the "most intrusive measures" the country has seen in peacetime in order to curb the spread of the novel coronavirus. 

Cultural and sports events would be canceled and Norwegians were asked to avoid public transport and work from home.

Bars, public swimming pools, gyms, hairdressers, massage and tattoo parlors, among others will be closed. 

As Western Europe's largest producer of oil, Norway has had a solid economy but the country is now affected by both the pandemic and the plunge in the price of oil.

Several economists have warned of the risk of recession this year. – Rappler.com