OSLO – The Norwegian economy has recovered from the coronavirus pandemic but now faces a negative impact from Russia’s invasion of Ukraine, Statistics Norway (SSB) said as it released fresh forecasts on Friday.
“The war in Ukraine is significantly curbing the growth outlook for our trading partners in Europe, which in turn is having a negative impact on the Norwegian economy,” the agency said.
The Norwegian central bank will likely hike rates four times this year and once next year, hitting 1.75% by the end of 2023, SSB added.
Gross domestic product (GDP) for the mainland economy, which excludes the country’s oil and gas industry, is now expected to grow by 3.6% this year, somewhat less than the 4.1% predicted in December, SSB said.
“The forecasts assume that the war in Ukraine will be over in a couple of months. If this assumption is not realised, the ramifications for the Norwegian economy could be worse than estimated,” the agency said.
Core inflation is expected to rise by 2.1% in 2022, below an earlier forecast of 2.5%, while the prediction for 2023 is now for 2.0%, higher than the previous forecast of 1.7%.
Wages will likely rise by 3.6% and 3.8% this year and next, more than the previous forecasts of 3.3% and 3.5% for 2022 and 2023 respectively.
(Reporting by Terje Solsvik, editing by Nora Buli)
