Going forward, activity in the Norwegian economy is expected to pick up, while inflation will continue to fall. Lower inflation and reduced interest rates among our trading partners will eventually lead to key policy rate cuts in Norway.
'Lower interest rates and clear wage growth will see household consumption increase. Economic activity will also pick up as a result of higher public spending and an increase in housing investment,' says Statistics Norway's head of research, Thomas von Brasch.
Photo: Dreamstime
Statistics Norway's forecasts show that activity in the Norwegian economy will pick up markedly in 2025 and be almost cyclically neutral from 2026.
'The economic standstill in Norway will end soon', says Thomas von Brasch.
Price growth will slow
Consumer price growth has been particularly high in recent years due to international factors and the depreciation of the krone. Price growth has not been this strong since the 1980s. The growth rate in the Consumer Price Index (CPI) has fallen from 7.5 per cent in October 2022 to 3 per cent in May this year. Going forward, price growth is expected to slow further.
Real wage growth expected
According to the forecasts, wage growth will be 5.2 per cent this year, before falling to just under 4 per cent by 2027. With this outlook, the labour cost share will gradually increase and approach the average over the last 20 years. Annual real wage growth will then be close to 1.5 per cent until 2027.
Unemployment will continue to rise slightly
Throughout 2023, unemployment as measured by the Labour Force Survey (LFS) increased from 3.5 per cent at the start of the year to 3.8 per cent at the end of the year. Unemployment has continued to rise in 2024 and was 4 per cent in April, which is close to the average in the 2010s. According to Statistics Norway's estimates, unemployment is set to rise to 4.1 per cent this year and then to 4.2 per cent in 2025.
More information:
Statistics Norway
www.ssb.no