Impact of war in Ukraine remains key downside risk for Norway

Our 2022 Norway GDP growth forecast remains unchanged at 3.6%, but a stronger-than-expected impact from the war in Ukraine on household consumption represents the main downside risk to our outlook. Otherwise, growth prospects remain resolute. An incredibly tight labour market should see strong wage growth this year, which will partially offset the impact of higher inflation on real incomes.

What you will learn:

• The petroleum sector is committed to maintaining high natural gas export volumes as European countries shift away from Russian gas, but the scope for increasing overall production capacity this year remains limited. In 2023, we see mainland growth easing to 2.3%.
• The government’s subsidy scheme for household energy bills has been extended to March 2023, which has already exerted considerable downward pressure on headline inflation.
• After hiking in March, Norges Bank expects to raise rates by a further 175bps before end-2023, bringing the Selic rate to 2.5%.