Norwegian economy likely to expand 1.6 pct this year, says DNB

The Norwegian economic growth decelerated in the recent years due to reduced oil investment. However, the oil induced deceleration is coming to an end, according to a DNB research report. The decline in oil investments is abating, while firms have adapted to higher competition and lower demand. Consumer sentiment and business indicators are rising, increasing optimism in the economy. Also, the labor market is rebounding.

However, growth impulses continue to be subdued and exports are not being boosted despite the weak NOK. Investments in housing have underpinned economic growth; however, they are now close to a peak level. Expansionary fiscal policy has also been a significant buffer following the decline in oil prices. Less expansionary fiscal policy is expected going forward after the downward adjustment of the fiscal rule.

“We forecast growth in Mainland GDP at 1.6 percent in 2017 and 1.7 percent in 2018. For 2019-2020 we see growth at 1.9 percent”, added DNB.