Could a recession be on the cards for Norway?
A recession may be on the horizon for Norway in the next couple of years, according to a report from national data agency Statistics Norway on Friday.
Prices in Norway rose by 6.5 percent between August 2022 and the same month the year before, the latest figures from Statistics Norway (SSB) show. In July, prices were up 6.8 percent compared to the previous year.
The national data agency wrote in a forecast of the economy that tougher times may be ahead for the Norwegian economy.
“Broad price growth, increased interest rates and weaker growth prospects internationally will lead to a recession in Norway in the coming years,” Statistics Norway wrote.
Statistics Norway said that it expects the central bank of Norway, Norges Bank, to continue raising interest rates throughout 2022, however.
A rate rise of 0.5 percent is expected in September, followed by 0.25 percent increases in the following two months.
“We assume that Norges Bank prioritises curbing inflation now, and thus raises the interest rate despite weak growth in the economy,” Statistics Norway CEO, Geir Axelsen, wrote.
Throughout next year the data collection agency expects unemployment to rise and economic activity to fall.
“Towards the end of 2023, according to the forecasts, we will be in a situation where inflation has come down, while unemployment has increased, and activity is low. Then we estimate that Norges Bank will lower the key interest rate again to stimulate the economy,” Axelsen explained.
In addition, Statistics Norway said it was expecting house prices to fall in 2023 and 2024. It said house prices would fall due to weak real wage growth, high inflation and rising unemployment.