Norway Economic Forecast

Norway Economic Outlook

October 25, 2016

Robust private consumption due to an accommodative monetary policy and fiscal policy support propelled mainland growth in Q2. This positive news, however, was offset by a renewed drop in oil-related output and investment as low oil prices continue to dampen activity in the all-important sector. August’s drop in industrial production confirms the fragility of Norway’s economic growth. On 6 October, the government presented the 2017 budget and stated that it will use around 3.0% of Norway’s USD 880 billion sovereign wealth fund, which is below the 4.0% fiscal rule limit. The expansionary budget promises to shore up growth next year. In an attempt to boost its returns in a context of low government bond yields, the fund will increase its allocation to equities from 60% to 70%. Norway’s massive oil fund owns, on average, 1.3% of all globally listed equities.

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Norway Facts

Bond Yield1.354.72 %Oct 26
Exchange Rate8.28-0.06 %Oct 26
Stock Market633-1.93 %Oct 26

Norway Economic Growth

October 25, 2016

Low oil prices are translating into high unemployment and weak investment, which are keeping overall growth subdued. GDP is expected to expand 1.0% in 2016, which is up 0.1 percentage points from last month’s forecast. In 2017, our panel sees the economy growing 1.4%. Mainland GDP, which excludes oil drilling activities, is expected to expand 0.9% in 2016, which is unchanged from last month’s forecast. The panel expects it to increase to 1.8% in 2017.

Norway Economic News

  • Norway: Inflation eases further in September

    October 10, 2016

    In September, consumer prices climbed 0.3% from the previous month, which contrasted August’s reading (-0.5% month-on-month) but undershot market expectations of a 0.7% increase.

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  • Norway: Industrial production swings to contraction in August

    October 7, 2016

    In August, industrial production decreased 4.7% over the previous month in seasonally-adjusted terms, which contrasted the 4.7% expansion recorded in July and marked the lowest reading since April 2015.

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  • Norway: Norges Bank leaves rate unchanged at 0.50%

    September 22, 2016

    At its 21 September policy meeting, Norges Bank (NB) decided to leave its key policy rate at the all-time low of 0.50%, as was expected by market participants. Norges Bank noted that global growth was moderate and that in the medium term import demand from its main trading partners will be lower than previously expected.

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  • Norway: Inflation eases in August

    September 9, 2016

    In August, consumer prices dropped 0.5% over the previous month, which contrasted July’s reading (+0.6% month-on-month) and undershot market expectations of a 0.4% drop.

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  • Norway: Industrial production rebounds in July

    September 7, 2016

    In July, industrial production expanded 5.5% over the previous month in seasonally-adjusted terms, which marked a rebound from the 4.7% fall recorded in June and represented the highest reading since October 2012.

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