Norway’s inflation should drop to 4.8% in 2023
Norway’s headline inflation, which is the most recent figure available, will go down from 5.8% last year to 4.8% in 2023.
The panel, which includes representatives from employers’ federations, labor unions, and Statistics Norway, will have an impact on how Norway’s yearly round of collective bargaining plays out. While setting interest rates, the Norwegian central bank closely watches worker compensation since it can affect future inflation.
The pay commission expects core inflation, which doesn’t include changes in taxes and energy prices, to be 5.1% this year, above the central bank’s long-term objective of 2.0%. In January, Norway’s core inflation rate rose to 6.4%, the highest level on record. A large margin beat the central bank’s forecast of 5.9%.
The commission says manufacturing sector earnings increased 4% last year. Factory workers saw an increase of 3.5%, and office workers saw a 5% increase.
In 2023, industrial wages will increase by 1.3% because of agreements reached last year, according to the commission.
According to Kyrre Aamdal, a senior economist at DNB Markets, while the commission’s projection for headline inflation is consistent with the central bank’s forecast from December, the broader consequence is for wages to climb by roughly 5%.
Kyrre noted that it is a little higher than both they and Norges Bank have projected. He continued that they believe today’s report supports the rate stance that the DNB has expressed that there would be rate increases at the next three central bank meetings. The central bank declared its intention to increase its benchmark interest rate from 2.75% in March in January.
The Norwegian Statistical Bureau (SSB) reports that during March and April, Norway’s GDP dropped by about 10%. It grew by 2.4% as of May.
Information on the economy of Norway
The jobless rate increased from 2.3% in February to 9.5% in April last year, according to statistics provided by the Norwegian Social Security (NAV). The June statistics indicated a 4.8% unemployment rate.
The economy of Norway is a mixed economy with significant governmental ownership in important sectors (shipping, machinery, minerals, fish), a wealth of natural resources (oil, gas, minerals, fish), hydropower, and a developing tourism sector.
In Northern Europe, Sweden has the largest economy ($556 billion), due to its enormous population, followed by Norway ($418 billion) and Finland ($277 billion). However, Norway has the highest per-capita income (11th in the world).
