191
Norway Mainland GDP growth will ease slightly as capacity constraints bind further. GDP growth will remain above trend and the narrowing of spare capacity will transmit into higher wage growth and continued reductions in unemployment. Given above-trend growth, Norges Bank’s gradual tightening of monetary conditions and the neutral stance of fiscal policy are appropriate. However, the authorities must remain vigilant given the risks surrounding the housing market and mortgage borrowing, along with elevated oil-price uncertainties amid the weakening global outlook. Structural policy should focus on improving the employment prospects of vulnerable groups and public-sector spending efficiency. Economic growth has eased somewhat Mainland output growth (i.e. abstracting from oil and gas production) has eased a little in recent quarters but remains above potential. Labour and product markets continue to tighten. The rate of unemployment is falling, wage growth is picking up and headline inflation has moved above the 2% target, partly due to exchange-rate depreciation. Rising oil prices following the end-2018 low point are reviving oil-related activity. Solid household consumption growth and a bottoming out of housing construction have supported overall activity. In addition, import growth has been comparatively weak. Recent non-oil export data show a mixed picture, pointing to weakness in services but strength in goods. House-price increases have resumed following some downward adjustment, but at a moderate pace. However, the stock of unsold houses remains high and properties are taking longer to sell, which may foreshadow a further downward correction. The debt-to-income ratio among households remains elevated.
Norway Mainland economic activity is already easing
House prices are rising again but at a slow rate
Y-o-y % changes 3.0
Index 2015 = 100 120
% of disposable income 260
2.5
115
250
2.0
110
240
105
230
1.5
0
1.0
← House prices
100
0.5 0.0
95
Potential mainland GDP
2013
220
Household debt ratio →
Mainland GDP¹
2015
2017
90
210
2015
2016
2017
2018
200
1. Estimates for 2019Q1. Source: OECD Economic Outlook 105 database; and Statistics Norway. StatLink 2 https://doi.org/10.1787/888933934812
OECD ECONOMIC OUTLOOK, VOLUME 2019 ISSUE 1: PRELIMINARY VERSION © OECD 2019