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Mainland output growth will moderate over the next two years as the boost from recent oil price increases lessens, overall capacity constraints tighten, and unemployment falls further. Housing construction will remain subdued. Consumer price and wage inflation will increase gradually.
The neutral fiscal stance implied by the fiscal rule and proposed in the 2019 budget is appropriate given solid, but moderating, output growth. The central bank is signalling another increase in its policy rate in March 2019, which is appropriate to contain inflationary pressures. Structural reforms should remain focused on improving the business environment, while maintaining good social outcomes, including lighter taxation financed by greater public-spending efficiency. Following through on proposed measures to meet climate-change commitments will be important.
Source: OECD Economic Outlook 104 database; Statistics Norway; and Real Estate Norway (Eiendom Norge).
Economic Survey of Norway (survey page)