So far this year, the Norwegian economy has been in a clear upturn. In the next few years, higher real wages, lower interest rates and increased public demand will boost economic activity.
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After a period of weak growth in 2023 and 2024, value creation in the Norwegian economy has picked up appreciably so far this year, driven by household demand and an expansionary fiscal policy.
"The Norwegian economy is thriving. Household purchasing power has increased and income growth will continue for the next years. In addition, the state has gained greater purchasing power because of the enormous increase in the petroleum fund, which provides scope for a continued expansionary fiscal policy in the near term," says Thomas von Brasch, head of research at Statistics Norway.
On balance, growth in the mainland economy the next few years is expected to exceed what we regard as normal growth in the Norwegian economy of around 1.5 per cent.
Solid growth in real wages going forward
Annualised growth in monthly basic earnings was 5.3 per cent in Q2, which is a little higher than in the three previous quarters. Wage growth was broad-based.
"Wage growth has been surprisingly high this year, and well above the norm of 4.4 per cent proposed by the wage leader segment. We have therefore revised our projection for wage growth this year up to 4.9 per cent," says Thomas von Brasch.
Our inflation projection implies that real wage growth will be around 1.9 per cent this year. This is slightly higher than the projection that implicitly formed the basis for the wage settlement earlier this year. Real wage growth will slow gradually to just over 1 per cent in 2028. By way of comparison, real wage growth has averaged 0.3 per cent for the past ten years.
