Economic growth is likely to pick up further over the next two years, and will already this year be above trend. Labour market conditions are set to improve further.
Economic activity in Norway is on a rising path and the fall in unemployment continues. Growth is broad-based. Private consumption is going up and businesses are investing more, both inside and outside the petroleum sector. The economic downturn following the sudden fall in oil prices in 2014 is now behind us.
Economic policy has supported the rebound of the Norwegian economy. Active use of fiscal policy has helped stabilize economic developments. Improved competitiveness facilitates a rebalancing of the economy and makes business thrive by allowing firms to exploit opportunities from improved economic conditions globally. It follows that exports are likely to rise.
Across sectors and regions, firms report a rise in production. According to Norges Bank’s regional network, mainland businesses are stepping up investments plans. Oil prices are higher than foreseen last fall and oil companies are planning to scale up activity at the Norwegian shelf.
Household income is up and sentiments improving and we expect consumption to rise. Yet, high debt leaves households vulnerable. A welcome house price correction over the last year may curb credit growth and reduce the risk of a major set-back to the economy going forward.
Ever more people find new jobs. Employment was rising throughout last year, after sluggish developments in 2015 and 2016. The fall in labour participation has come to an end. Onwards, employment is predicted to grow faster than the working age population. Both LFS and registered unemployment have been falling over the last 18 months. Registered unemployment is now well below the last 20 years average and was in February at its lowest in five years. Also LFS unemployment has come down from the high levels seen in the summer 2016 and is expected to decrease further.
See table 1, presenting estimates to the March conference on the 2019 budget.
Key figures for the Norwegian economy1
| NOK billion2,3 | |||||
| 2017 | 2017 | 2018 | 2019 | ||
| Private consumption | 1 474,7 | 2,3 | 2,7 | 3,0 | |
| Public consumption | 790,6 | 2,0 | 1,3 | ||
| Gross fixed investment | 784,2 | 3,5 | 3,8 | 2,9 | |
| Petroleum | 149,5 | -4,0 | 5,3 | 8,1 | |
| Business sector. Mainland Norway | 255,3 | 5,1 | 9,3 | 4,4 | |
| Housing | 203,4 | 7,1 | -4,0 | -3,1 | |
| General government | 178,6 | 5,8 | 1,5 | ||
| Demand from Mainland Norway4 | 2902,6 | 3,0 | 2,3 | 2,2 | |
| Exports | 1148,2 | 0,8 | 2,4 | 2,2 | |
| Crude oil and natural gas | 441,8 | 1,9 | -2,3 | -3,0 | |
| Traditional goods | 381,5 | 2,2 | 4,5 | 4,8 | |
| Services, excluding oil and internat. shipping | 224,9 | -2,2 | 8,9 | 6,9 | |
| Imports | 1 082,2 | 2,2 | 4,2 | 3,5 | |
| Gross domestic product | 3 279,4 | 1,8 | 1,9 | 1,9 | |
| Mainland Norway | 2803,8 | 1,8 | 2,5 | 2,6 | |
| Other key figures | |||||
| Employment, persons (percentage growth) | 1,1 | 1,3 | 1,1 | ||
| Unemployment rate, LFS (level) | 4,2 | 3,8 | 3,7 | ||
| Unemployment rate, registered (level)5 | 2,7 | 2,3 | 2,3 | ||
| GDP growth among trading partners6 | 2,8 | 2,7 | 2,4 | ||
1) Percentage volume change from previous year.
2) Preliminary national account figures.
3) Current prices.
4) Excluding inventory changes.
5) Measured as per cent of the LFS labour force.
6) Norway’s 25 most important trading partners weighted by respective shares of Norwegian exports excluding oil and gas.
Sources: Statistics Norway, Norwegian Labour and Welfare Administration, OECD and Ministry of Finance.