The Norwegian economy has recovered from the coronavirus pandemic but is now facing the negative effects of the Russian invasion of Ukraine, Statistics Norway (SSB) said in its latest forecasts on Friday.
“The war in Ukraine significantly limits the growth prospects of our trading partners in Europe, which, in turn, has a negative impact on the Norwegian economy,” the agency said.
Norway's central bank is likely to raise its key rate four times this year and once next, to 1.75% by the end of 2023, SSB added.
The gross domestic product (GDP) of the Norwegian economy, excluding the country's oil and gas industry, is expected to grow by 3.6% this year, slightly less than the 4.1% forecast in December.
“The forecasts assume that the war in Ukraine will end in a couple of months. If this assumption is not implemented, the consequences for the Norwegian economy could be worse than expected,” the agency notes.
Core inflation is expected to rise by 2.1% in 2022, lower than the earlier forecast of 2.5%, and the forecast for 2023 is now 2.0%, higher than the previous forecast of 1.7% .
Wages are likely to rise by 3.6% and 3.8% this year and next, up from previous forecasts of 3.3% and 3.5% for 2022 and 2023, respectively.
