Wealth creation has picked up markedly since mid-2024, while unemployment has risen. Although inflation has fallen considerably since the peak in October 2022, and has remained at around 3 per cent through 2025, the level remains appreciably higher than the target of 2 per cent.

“Despite ongoing trade conflicts and uncertainty surrounding EU collaboration, Norwegian economic growth is expected to remain buoyant in the years ahead”, says Thomas von Brasch, head of Statistics Norway’s Research Department.

On balance, mainland growth is expected to remain close to normal growth in the Norwegian economy of just over 1.5 per cent for the next few years.

Increased household consumption and higher public demand

In 2024 consumption increased by about 1.5 per cent, and so far this year has been 2.2 per cent higher than in the same period last year. Higher real income and slightly lower interest rates will push household consumption up further going forward. Consumption growth for the years 2025–2028 is expected to average around 2.5 per cent.

According to the National Budget for 2026 and those of previous years, fiscal policy will contribute appreciably to pushing up the level of activity in the economy next year. The budget settlement will add a further NOK 4.6 billion to spending of petroleum revenue. Public demand, particularly as a result of defence investment, is expected to grow 2.0 per cent on average for 2027 and 2028, markedly higher than trend growth in the Norwegian economy.

Low residential construction and reduced petroleum investment

Housing investment accounts for about a fifth of overall mainland investment, and the slowdown in recent years has depressed activity in the Norwegian economy as a whole.

“We expect construction activity to remain low in the near term. Residential construction will only begin to pick up appreciably in 2027, when house prices are higher and the interest rate comes down further”, says Thomas von Brasch.

According to the projections, the rise in house prices will remain high in the years ahead, driven by a clear increase in real income and a decline in interest rates. House prices will then be around 20 per cent higher in 2028 than the level in 2024.

Petroleum investment has risen markedly in the past three years. The petroleum companies report an increase of around 6 per cent this year, and that this year's high investment level will be maintained next year. The largest construction projects launched in 2022 are planned to reach completion in 2027, which will mean a sharp fall in petroleum investment that year. Given a fall in 2028 as well, petroleum investment is expected to pull down mainland growth by around 0.3 percentage points in 2027 and 0.1 percentage point in 2028.

Two interest rate cuts in the next few years

After almost two years with a relatively high key policy rate, Norges Bank reduced the rate to 4.25 per cent before the summer, and then to 4.0 per cent in September. Their projections then indicated one rate cut per year for the next three years.

“Given inflation that is still higher than the target, it will take time for interest rates to come down further. We forecast one cut in 2026 and one more in 2027, bringing the key rate down to 3.5 per cent in 2027”, says Thomas von Brasch.

According to the projections, the key rate will remain at 3.5 per cent in 2028. Inflation, measured by the consumer price index adjusted for tax changes and excluding energy products, is expected to fall from just over 3 per cent this year to around 2.5 per cent in 2028. The projections imply that the real interest rate will remain in the upper part of the range cited by Norges Bank as a neutral real interest rate.

Unemployment will fall somewhat

The Labour Force Survey (LFS) shows that unemployment increased through the first half of the year. Much of the increase is due to an increased labour supply. The number registered as fully unemployed also increased slightly in November, for most occupational groups, according to the unemployment figures of the Norwegian Labour and Welfare Organisation (NAV). There are still many vacancies, although the number has decreased somewhat recently. Employment has increased steadily since the end of the Covid period, and the upswing is expected to continue in the years ahead, particularly in services. Increased demand for labour will lead to unemployment falling from an estimated 4.5 per cent this year to about 4 per cent in 2028.

Trade restrictions are not preventing growth in the global economy

Economic developments among Norway's trading partners have been positive in recent times, despite the introduction of trade restrictions.

“We have seen a stabilising of commodity prices, falling inflation and investment in AI infrastructure. Although developments have been somewhat more favourable than expected, the growth outlook in the US and Europe still reflects uncertainty”, says researcher Roger Hammersland of Statistics Norway.

Annual GDP growth among Norway's trading partners has averaged about 2 per cent since 2005. The projections indicate growth close to trend for the majority of our trading partners up to 2028. Thus the growth picture is somewhat more positive than that presented in our previous economic report in September.

The analyses in the report are based on information as of Wednesday, 10 December 2025.