Oslo - Norwegians should prepare for a drawn-out economic crisis, Prime Minister Jens Stoltenberg said Friday.

The effects of the current financial crisis were likely to continue well into next year, he warned.

"Unemployment is increasing, many companies are struggling and the bank and credit markets are not functioning normally," he said.

Stoltenberg said the global economic situation was "serious" and the downturn was the worst in decades.

Oslo was preparing a financial package to be presented to parliament on January 26, Stoltenberg told reporters. Among measures was support for repairs and improvements of public buildings to shore up the construction sector.

Compared to other countries Norway had some advantages, including large currency reserves and high employment rates. A concern for the government was the drop in oil prices, since Norway exports oil and gas.

In Sweden, the National Institute of Economic Research on Friday published a report that predicted that the Swedish gross domestic product (GDP) will shrink almost 1 per cent in 2009. In 2010, GDP was estimated to increase by 1.9 per cent.

Unemployment was also estimated to "rise sharply" in 2009 and 2010, climbing to 9 per cent end of 2010. Currently, Swedish unemployment was at 6.1 per cent. (dpa)