Norway

After a negative GDP growth rate of -1.9% in 2020, Norway recovered strongly in 2021, surpassing its pre-crisis GDP level and continued strong growth of +3.2% in 2022. To counter the effects of the health crisis, the Norwegian administration introduced a household income-protection program by offering higher wage subsidies for temporary layoffs, higher unemployment benefits and expanded health care. Heavily affected companies were also able to benefit from a compensation program. Key hard-hit sectors such as health care were strengthened. The unemployment rate fell from 4.4% in 2021 to 3.2% in 2022, with slight increases to expected over the next years.

High inflation and policy tightening are weighing on domestic demand and the slowing of the global economy led GDP to grow only very moderately in 2023. The economy will strengthen gradually but output growth will remain moderate at +0.6% in 2024 and +1.9% in 2025. Solid export growth and high energy prices led to a current account surplus of 30.3% of GDP in 2022. Despite a reduction in the trade balance surplus due to the moderation of energy prices, the current account surplus stayed high throughout 2023. Similar to other Nordic countries, Norway’s recovery has been accompanied by strong employment growth and the low recovery in immigration will continue to push the unemployment rate to a new record low, keeping upside pressures on wages. Against a strong recovery, the central bank has been one of the first among advanced countries to start normalizing. The peak policy rate stood at 4. 5% in December 2023. As a consequence, the housing market rally is paused but without major corrections.