|Norway’s mainland economy has been partially insulated from global financial turbulence and oil price volatility, reflecting the well-functioning fiscal framework governing oil revenues. The economy is projected to retain its momentum despite lower oil prices and falling investment by the oil industry in the near term. Household demand will remain solid with steady employment gains and rising household net worth. Non-oil exports and business investment will firm as the global economy improves.
With remaining labour market slack disappearing fast, the policy interest rate should start to rise in early 2016, before wage settlements accelerate and inflation expectations are undermined. Fiscal policy will continue to be expansionary, although well within the fiscal framework. The housing market has gathered pace again. Property prices and the exposure of banks to high household debt levels should continue to be monitored carefully and additional macro-prudential action taken as necessary.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.
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