Norwegian economy to accelerate

The Norwegian economy is set to grow rapidly in the next several years as it recovers from the impact of the pandemic, setting the stage for an imminent central bank rate hike, Statistics Norway (SSB) predicted on

Friday.

“The reopening of society is well underway, and the upswing in the Norwegian economy continues. The Covid-19 pandemic will nevertheless continue to impact on the economy for a long time to come,” SSB said.

“The first interest rate jump is expected to be in September.”

Non-oil gross domestic product (GDP) will rise by 3.6 per cent in 2021, the agency predicted, more than the 3.1 per cent growth seen in June, while next year will see expansion of 3.8 per cent, down from 4.1 per cent predicted three months ago.

SSB at the same time raised its growth forecasts for 2023 and

2024.

The Norwegian central bank last year slashed rates to a record low 0.0 per cent. It has said it intends to hike twice this year and three times in 2022, likely beginning at its next policy meeting on Sept. 23.

The key policy rate will likely rise to 1.75 per cent in 2024, SSB predicted, in line with the agency’s previous forecast.

Statistics Norway’s forecasts are based on authorities expecting to fully vaccinate some 90 per cent of adult Norwegians over the next four to six weeks, SSB said.

“If these assumptions are not fulfilled, further economic recovery will take longer than our calculations show,” it said.