Norway's economy is poised for moderate but resilient growth through 2028, driven by strong household consumption, recovering housing construction, and lower interest rates, according to Statistics Norway's latest economic trends report. However, rising global trade tensions and economic policy uncertainty, particularly from the US, are curbing momentum, with notable implications for Norway's domestic sectors, including construction and interior furnishings.
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'Growth in the Norwegian economy, which was curbed by high inflation and subsequent interest rate rises throughout 2023 and 2024, has picked up this year, partly as a result of strong growth in household consumption,' said Thomas von Brasch, Head of Research at Statistics Norway. He expects growth to continue, citing 'lower interest rates, continuing high wage growth, a stronger focus on defence and a turning point in housing construction.'
The report marks a potential revival in housing investments, a vital signal for the interior design and furniture industry. After a historic 20% fall in 2023 and 2024, housing investments are expected to recover by year-end. 'This turning point must be viewed in context with an expected fall in interest rates and the marked increase in new house sales since 2024,' von Brasch added.
A strengthening domestic market is bolstered by wage growth in Norway's industrial sector. 'Profitability in the industrial sector indicates that wage growth will remain strong in the coming years,' von Brasch stated, though real wage growth is forecast to soften from 2.4% in 2024 to 1% by 2028.
With interest rate cuts expected in both 2025 and 2026, the key policy rate is anticipated to decline from the current 4.5% to 3.25% by the end of 2026. 'Higher unemployment, lower underlying price rises, in addition to reduced demand and lower interest rates internationally, are making lower interest rates here in Norway more likely,' said von Brasch.
The interior design and furnishings industry, closely tied to housing starts and consumer confidence, stands to benefit from these shifts. Still, global volatility looms. 'Increased uncertainty over US economic policy has contributed to weaker growth prospects and greater fluctuations in financial markets,' said Statistics Norway researcher Roger Hammersland.
As mainland GDP growth gradually improves, from 0.6% in 2024 to 1.5% this year and next, furniture and interior design firms can look toward modest but meaningful demand recovery, particularly in residential construction.
More information:
Statistics Norway
www.ssb.no