Research Briefing | Jul 27, 2022

Norway’s growth outlook becoming more pessimistic

Higher inflation and weaker external demand as Europe battles with energy shortages have led us to lower our Norwegian mainland GDP forecasts by 0.6ppts to 2.6% in 2022 and 0.3ppts to 2.3% in 2023. Norway’s energy supply remains secure thanks to its hydropower electricity grid, but its integration into regional power exchanges means energy prices will spike this year, squeezing household incomes.

What you will learn:

  • GDP downgrades in Norway’s major European trading partners and tighter financial conditions will also hit growth, but growth is seen remaining above the average in the decade prior to the pandemic.
  • Output has underperformed so far in Q2, with resolute services activity being dragged down by weak goods spending as growth becomes increasingly two-speed between goods and services.
  • We have raised our 2022 inflation forecast 0.5ppts to 5.5%, with inflation peaking in Q3 and core inflation rising through 2022.

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