Business cycles

Economic growth has been moderate since mid-2022. Repeated interest rate hikes, high inflation and weak foreign demand have curbed activity. At the same time, unemployment has increased from a low level and is now about 4 per cent, which is the same as the average for the 2010s.

This paper examines the forecast accuracy of cointegrated vector autoregressive models when confronted with extreme observations at the end of the sample period.

Wage and income growth will be sustained by strong profitability in the wage-leading tradable sector, stimulating household consumption. Lower price growth and interest rate cuts will also increase consumption.

Petroleum-producing countries face unique challenges in meeting global emissions targets. As global petroleum consumption declines, these nations must reallocate resources and phase out a historically profitable industry.

Growth in the Norwegian economy has been modest since mid-2022. Several interest rate hikes, high inflation and low global demand have placed a damper on economic activity. At the same time, unemployment has increased from a low level, and is currently close to the average for the 2010s.

Strong profitability in the industrial sector and declining inflation are already leading to high real wage growth in 2024. The interest rate is most likely to be lowered from early 2025.

Growth in the Norwegian economy has been modest since mid-2022. High inflation and several interest rate hikes have contributed to curbing demand. At the same time there have been substantial, but declining pressures in the labour market. Unemployment has increased through 2023 and so far in 2024 and is now close to the average for the 2010s.

Going forward, activity in the Norwegian economy is expected to pick up, while inflation will continue to fall. Lower inflation and reduced interest rates among our trading partners will eventually lead to key policy rate cuts in Norway.

Interest rate hikes, stagnation of activity and slowing inflation characterised the Norwegian economy in 2023. It was also the year in which residential construction abruptly came to a virtual halt. The high labour market pressures eased somewhat through the year, and unemployment has now reached a level in line with the average for the 2010s.

Increased profitability in certain industries will stimulate real wage growth in the years ahead. The increased purchasing power will pull Norway out of the economic downturn in 2026.