A solid rise in capital spending, both in the oil industry and by mainland companies, helped to boost Norwegian growth in 2019. Investment is expected to increase considerably more slowly in the current year, weakening this growth impulse. Two important drivers lie behind this trend. First, large parts of the Johan Sverdrup development were completed in 2019. Second, growth among Norway’s trading partners, which slowed last year, will weaken even further in 2020.

Reduced benefit from oil investment and a weaker growth outlook internationally and to the probability that the economic boom we have enjoyed over the part three years will be replaced by a more cyclically neutral period up to 2022. SSB expects growth in the Norwegian mainland economy to decline from 2.5 per cent in 2019 to 1.9 per cent this year and 1.5 per cent in 2021. Employment growth is expected to fall from 1.7 to 0.4 per cent over the same period. Reduced demand internationally and the after-effects of Norges Bank’s base-rate rise will probably dampen labour requirements in the time to come.

Employment in office-intensive sectors in Oslo increased faster than the overall national rise in jobs from 2016 to 2019.¹ Office jobs in Oslo grew by an estimated 2.4 per cent last year. That represented a solid level historically, but was down from 3.2 per cent in 2018. We expect the increase in office employment in the capital to slow even further, in line with the macroeconomic trend.

After Norges Bank raised its base rate for the fourth time on 19 September 2019, the central bank has opted to keep this at 1.50 per cent. The interest-rate curve indicates that the base rate will most probably remain at today’s level to the end of 2022. While a weaker krone means a higher interest-rate curve viewed in isolation, trends in the Norwegian economy are pulling in the opposite direction. The signs are that the boom has peaked for this economic cycle, and thereby that short-term interest rates will not be rising further.