The economy will grow briskly for years and the red hot property market – the biggest risk in an otherwise model economy – will cool gradually, the agency said in a quarterly projection.
Three months ago the agency projected economic growth of 2.2 percent in 2013.
Investments in oil and gas, which make up a fifth of the economy, will rise to 207.8 billion crowns ($37 billion) next year from 180.6 billion in 2012 as energy firms develop a string of recent discoveries and drive their existing assets hard to take advantage of high oil prices.
“Oil investment data indicate a big rise for next year and that will provide an important impetus for overall growth,” Steinar Juel, chief economist at Nordea said. “The forecasts are quite strong, maybe even a bit too strong.”
Indeed, the oil sector and the service companies that keep it going, are running near capacity, raising the risk of slippage, others noted.
“There are (increasing) capacity constraints especially within drilling, which is crucial for exploration activities, and for production wells coming on-stream timely during a field development and start-up,” SEB said in a note.
“As such, planned investments for 2013 might be pushed into 2014 which will keep investments levels at historic high levels,” it added.
The boom has lifted nominal per capita GDP above $100,000 for the first time this year and kept unemployment at about 3 percent even as the euro zone is struggling with a recession.
Excluding the oil and gas sector, Statistics Norway cut its 2013 growth forecast to 2.9 percent from 3.1 percent as other exporters feel the chill from Europe’s weakness.
The agency also predicted slowing housing price growth, a welcome sign for the central bank, as construction sector picks up its pace to meet rising demand from rapid immigration.
“The growth in property prices will come down to just over 1 percent as we head towards 2020,” SSB researcher Torbjoern Eika told a news conference. “This is not a bubble … it’s a soft landing.”
“It would take a powerful shock for property prices to fall significantly,” Eika added.
For the next two years though, the agency sees housing prices rising by more than 6 percent a year, faster than incomes, pushing already high household debt levels even higher.
Norwegian households are among the most indebted in Europe with a debt to income ratio of 200 percent. Several major agencies, like the IMF and the OECD, have warned that Norway may be experiencing a housing bubble.
The central bank would be keen to raise rates to push borrowing costs higher and cool the real estate market, but any increase risks firming an already strong crown currency and hurting exporters.
But even as households pile on debt, the savings rate is seen rising to around 9 percent in both 2013 and 2014, indicating that households are building a financial buffer. ($1 = 5.6240 Norwegian crowns)
Published: June 12, 2012