Norway skyline at night

Norway Economic Forecast

Norway Economic Outlook

Following a marginal GDP expansion in Q4, conditions grew more challenging at the outset of 2023. GDP slid 0.2% month on month in January. Private consumption plunged by over 10% in the month, marking the sharpest downturn since the outbreak of the pandemic in March 2020. Moreover, in January, the unemployment rate increased to a 14-month high and price pressures intensified, contributing to household spending’s retreat. Meanwhile, imports of goods and services contracted at a steeper pace than in December. Fixed investment also swung to a contraction, which more than offset a marginal uptick in public spending growth. Lastly, exports of goods and services declined in January. Furthermore, in February, the manufacturing PMI fell to a 30-month low as conditions deteriorated markedly. In late March, Norges Bank increased interest rates further, boding ill for credit and investment.

Norway Inflation

Inflation eased to 6.3% in February (January: 7.0%) amid softer price increases for housing and utilities. Similarly, core inflation also moderated, falling to 5.9%. While our panelists believe the downward trend will continue through Q4 2023, headline inflation will remain above Norges Bank’s 2.0% target this year. A weaker-than-expected krone is an upside risk.

Norway Economic Data

2017 2018 2019 2020 2021
Population (million) 5.3 5.3 5.4 5.4 5.4
GDP (USD bn) 402 439 409 368 490
GDP per capita (USD) 75 82 76 68 90
GDP (EUR bn) 356 372 365 323 414
GDP per capita (EUR) 67 69 68 59 76
GDP (NOK bn) 3 3 3 3 4
Economic Growth (Nominal GDP, ann. var. %) 6.6 7.6 0.6 -3.8 21.7
Economic Growth (GDP, ann. var. %) 2.5 0.8 1.1 -1.3 3.9
Economic Growth (Mainland GDP, ann. var. %) 2.2 1.9 2.3 -2.8 4.2
Domestic Demand (ann. var. %) 2.5 2.0 2.0 -3.8 2.6
Private Consumption (ann. var. %) 2.2 1.4 1.0 -6.2 4.4
Government Consumption (ann. var. %) 1.9 0.6 1.1 -0.5 5.0
Fixed Investment (ann. var. %) 2.6 2.2 9.5 -4.1 -0.8
Exports (G&S, ann. var. %) 1.6 -1.5 2.1 -2.3 5.8
Imports (G&S, ann. var. %) 1.8 1.4 5.3 -9.9 1.7
Industrial Production (ann. var. %) 2.3 1.1 -5.0 4.1 3.3
Wages (ann. var. %) 2.2 2.7 3.6 3.2 3.3
Unemployment (% of active population, aop) 4.2 3.9 3.7 4.6 4.4
Fiscal Balance (% of GDP) 5.0 7.8 6.5 -2.6 10.0
Public Debt (% of GDP) 37.5 38.9 39.9 45.2 42.5
Money (ann. var. of M2 %) 6.0 5.3 4.2 12.1 10.4
Inflation (CPI, ann. var. %, eop) 1.6 3.5 1.4 1.4 5.3
Inflation (CPI, ann. var. %, aop) 1.9 2.8 2.2 1.3 3.5
Inflation (HICP, ann. var. %, aop) 1.9 3.0 2.3 1.2 3.9
Inflation (Core, ann. var. %, aop) 1.4 1.5 2.2 3.0 1.7
Inflation (PPI, ann. var. %, aop) 9.3 14.8 -3.6 -10.2 37.8
Sight Deposit Rate (%, eop) 0.50 0.75 1.50 0.00 0.50
3-Month NIBOR (%, eop) 0.81 1.27 1.84 0.49 0.95
10-Year Bond Yield (%, eop) 1.65 1.79 1.55 0.96 1.71
Stock Market (ann. var. of OSEBX %) 19.4 -2.0 16.4 4.2 23.3
Exchange Rate (NOK per USD, eop) 8.2 8.7 8.8 8.6 8.8
Exchange Rate (NOK per USD, aop) 8.3 8.1 8.8 9.4 8.6
Exchange Rate (NOK per EUR, eop) 9.8 9.9 9.9 10.5 10.0
Exchange Rate (NOK per EUR, aop) 9.3 9.6 9.9 10.7 10.2
Current Account Balance (EUR bn) 22.5 33.3 13.8 3.6 56.5
Current Account Balance (% of GDP) 6.3 9.0 3.8 1.1 13.6
Merchandise Trade Balance (EUR bn) 19 30 16 1 53
Foreign Direct Investment (EUR bn) -5.2 0.2 14.9 -1.2 -1.4

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