Rising private consumption will be the most important growth driver in coming quarters. Statistics Norway forecasts an increase of 7.8 per cent in 2022, while Norges Bank expects household consumption to climb by no less than 9.6 per cent next year. The foundation for this growth lies in the household savings surplus, which doubled from 2019 to 2020.

As with households, cash reserves at Norwegian companies have increased a lot since spring 2020, and both Statistics Norway and the central bank expect corporate investment to rise markedly in 2022-24. Companies are moreover optimistic about the future. Far more of them are planning workforce increases rather than cutbacks.¹ 

Enthusiasm about taking on more people is not confined to the tourism and restaurant sectors. Many office-based companies in financial and other commercial service provision have big recruitment plans.² That provides a good basis for increased demand for office space.

The business trends survey from SR-Bank for the third quarter registered the greatest-ever optimism among oil and gas companies. Their earnings are good in a market characterised by high oil and gas prices, while they have acquired more legs to stand on through the green transition.

Although economic developments in most of Norway’s trading partners resemble those we see here, with much of the GDP decline reversed or in the process of reversing, trends differ markedly between Europe and the USA. While GDP in 2024 is expected to be two per cent lower in the eurozone than estimated in January 2020,³ it is forecast to be  2.9 per cent higher in the USA compared with pre-pandemic estimates.

This difference is largely attributable to the much more expansive finance policy being pursued by the Americans. Higher growth and inflation expectations help to push up the level of interest rates. The most important implication for the Norwegian property market is that long-term interest rates could rise. Since mid-August, the Norwegian 10-year rate has risen by about 50 basis points to two per cent.⁴

Economic developments in Norway contributed to the decision by Norges Bank at the rate-setting meeting on 22 September to increase its base rate from zero to 0.25 per cent. The central bank indicated at the same time that it expects the next rate increase to come in December, and that a total of seven rises are likely by the end of 2024.

Since inflation has risen to more than four per cent (past 12 months), however, the real interest rate in Norway remains record-low at -3.5 per cent.