Norway Economic Forecast

Norway Economic Outlook

June 2, 2020

The panorama appears bleak in the second quarter after the economy shrank at the fastest pace in nearly a decade in the first quarter due to a major fall in household spending. Data for April reveals the economy at a standstill: Crude oil production sank to its lowest level in almost 17 years amid evaporating global demand and dwindling domestic investment. As a consequence, exports slumped markedly in April, while consumer confidence hit a four-year low and unemployment remained high in the month. Moreover, conditions remained dour in May amid depressed oil prices and constrained consumer spending due to the lockdown. In response, the government announced plans in mid-May to exceed a self-imposed limit on spending for the first time in a decade, in order to stem the economic impact of the pandemic. Meanwhile, lockdown measures continue to be eased, although most travel restrictions look set to remain in place for some time.

Norway Economic Growth

The economy is set to contract sharply this year as household consumption shrinks amid a coronavirus-related tightening of purse-strings. Slack demand for oil and gas, and falling domestic output will weigh on the external sector, while the pace of the rebound in global trade remains the key risk to the outlook. FocusEconomics Consensus Forecast panelists see total GDP contracting 4.9% in 2020, which is down 0.8 percentage points from last month’s forecast, before expanding 4.5% in 2021. In terms of mainland GDP, our panelists see a contraction of 6.0% in 2020, which is down 0.4 percentage points from last month’s projection, before an increase of 4.7% in 2021.

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Norway Facts

Value Change Date
Bond Yield1.58-0.65 %Jan 01
Exchange Rate8.78-0.38 %Jan 01

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