Despite rising trade tensions and a more fragmented global economy, Norway is expected to see steady growth through 2028, driven by higher real wages, lower interest rates, and increased public spending, according to Statistics Norway's latest forecast.
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Recent years have seen economic slowdown due to high inflation and interest rate hikes, alongside increased global uncertainty following the return of the Trump administration. However, Statistics Norway's head of research, Thomas von Brasch, remains optimistic.
'Despite rising trade tensions, higher tariffs and prospects of a more fragmented global trade landscape, we expect continued high real wage growth, lower interest rates and growing public demand to boost economic activity in Norway in the coming years,' says von Brasch.
While global trade restrictions will weaken economic activity, they are not expected to prevent growth in Norway.
'Trade conflicts will dampen global value creation but will not prevent clear growth in the Norwegian economy. However, this growth depends on Norway not being directly impacted by measures the EU introduces in response to the US tariff increases,' von Brasch adds.
Domestic drivers of growth
High household incomes, lower interest rates, and increased defence investments are key factors in Norway's economic expansion. A recovery in the housing market is also expected as demand and house prices rise.
'The fragmentation of global trade is weakening overall value creation, but the ramifications within our forecast horizon are likely to be limited. Although we have downgraded the forecast for mainland GDP by just over 1 per cent from 2025 to 2027, we still expect growth in the Norwegian economy,' von Brasch states.
Norway's mainland GDP is projected to rise from 0.6 per cent in 2024 to over 1 per cent in 2025, reaching around 2 per cent from 2026 onwards.
Wages and inflation trends
Inflation, measured by the Consumer Price Index (CPI), fell from 5.5 per cent in 2023 to 3.1 per cent in 2024, but remains slightly above the 2 per cent target due to the weakened krone and rising global prices.
'Last year's 2.4 per cent real wage growth was the highest since 2012. Strong profitability in the manufacturing sector suggests that real wage growth will remain high this year, likely around 1.5 per cent,' says von Brasch.
Interest rate outlook
Norway's key policy rate has remained at 4.5 per cent since December 2023. While previous forecasts suggested five rate cuts in 2025, higher-than-expected inflation and economic uncertainty may delay reductions.
'Increased uncertainty and higher inflation than expected in February means that interest rate cuts will take a bit longer. Our interest rate forecast includes two cuts this year and three next year. The key policy rate will hen fall to 3.25 per cent in 2026,' von Brasch says.
Global economic challenges
Uncertainty around Trump's trade policies is affecting global markets.
'Frequent changes in the rules-based order make long-term planning difficult and create particular risks for cross-border investment and trade. Global growth is expected to be weak in the coming years,' says Statistics Norway researcher Roger Hammersland.
Despite these challenges, Norway's economy remains on track for stable growth, supported by domestic demand, real wage increases, and strategic public investments.
More information:
Statistics Norway
www.ssb.no