Economic Survey 4-2005

Growth in the Norwegian economy remains high and is higher than what can normally be expected in the longer term. We expect that growth will be sustained for a few quarters ahead, but moderate through 2006. The cyclical upturn has been stimulated by an expansionary monetary and fiscal stance and strong growth in petroleum investment. This has engendered high growth in household consumption and housing investment. The latest quarterly national accounts indicate that housing investment has peaked, and the underlying tendency for housing starts has been falling for close to a year. Purchases of consumer durables are also exhibiting moderate growth and on balance this may suggest that we are entering a period of lower growth in household demand than observed so far in this cyclical upswing. The labour market now seems to be tightening somewhat in that the number of employed is rising at a faster pace than earlier in the upturn, with an attendant fall in registered unemployment. However, the number of job-seekers without employment (LFS) remains high in light of the fact that the cyclical upturn has now spanned a little more than two years. Underlying consumer price inflation has shown little change during autumn after edging up slightly during the first six months of the year. The krone exchange rate depreciated somewhat in autumn, but is still strong compared with the level prevailing at the beginning of the year.