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Six reasons to be optimistic about life in Norway in 2023

The cost of living in Norway may be on the up, but it's not all bad news, and there are a few reasons to be optimistic about the year ahead. 

Pictured is a dog and people enjoying the weather off of one of Oslo's islands.
Here re six things to be optimistic about in Norway. Pictured is a dog and people enjoying the weather off of one of Oslo's islands. Photo by Kamil Klyta on Unsplash

For some, the future may look bleak, and while there may not be an abundance of good news out there at the moment, there are certainly some silver linings we can look to in Norway. 

While it may feel hard to remain upbeat in the face of an increased cost of living, high energy prices and gloomy economic forecasts, we’ve put together a list to try and help you look towards the positives. 

It should be easier to get on the property market in 2023

Becoming a homeowner in Norway may be easier in 2023 than in 2022 and 2021 for several reasons. 

First, new regulations mean it will be easier to secure a mortgage this year. Applicants will be required to weather interest rate increases of three percent, rather than five percent. 

This means that a mortgage will be within the reach of more people as their finances will be less stringently tested. 

Additionally, Norway’s property market will likely see decreases in house prices in most places, making homes more affordable. 

While for existing homeowners, this will interpreted more as a negative, they can take solace in the fact that dips in house prices won’t be too severe. 

Interest rates to peak

Throughout 2022, Norway’s key policy interest rate increased fivefold to 2.75 percent. This has meant much higher mortgage and loan repayments for homeowners and borrowers. 

The upshot is that interest rates will peak in 2023 and should only increase another 0.25 percentage points if economic forecasts are to be believed. 

This means consumers won’t have to worry about the prospect of interest rates and repayments going up as rapidly in 2023. This stabilisation will make it easier for homeowners to plan their ingoings and outgoings this year. 

More travel opportunities and routes

In 2022, the travel industry began to bounce back following the pandemic, with 2023 shaping up to be an even better year for travel to and from Norway. 

Next year, the number of international flight routes to and from Norway will increase.

Loganair, Widerøe, Austrian Airlines, SAS and Norwegian are just some companies that have announced new routes and increased departures to and from Norway. 

What’s best is that there will be more connections and options from airports other than Oslo, allowing those not in the capital to enjoy increased travel options. 

READ MORE: The new international flight routes from Norway in 2023

If a potential recession hits Norway, it won’t be catastrophic

While not an entirely positive point in and of itself, we are choosing to look at the silver lining: a possible recession in Norway wouldn’t be too hard-hitting. 

Additionally, a recession for Norway isn’t currently on the cards. If other major economies worldwide head into recession, Norway may follow suit. 

“Norway is influenced by the outside world. When it’s bad out there, it’s bad in Norway too. It would not be surprising if there were a recession in Norway,” Kjersti Haugland, chief economist at DNB, told the news bureau NTB.

“Things look less dramatic right now than they did just six months ago… Yes, there will probably be a slowdown in the economy, but perhaps not very dramatically,” she added, highlighting that financial policies and support schemes have helped that things are not worse.

Inflation to slow down 

One of the biggest things that squeezed households over the past 12 months, inflation, is likely to slow down significantly in the year ahead. 

Economic forecasts believe that inflation in Norway will stabilise between two and four percent, compared to the six percent plus seen throughout 2022. 

This should allow wage growth to keep up with inflation and ensure that most workers aren’t worse off in real terms. 

At the turn of the year, several economic experts told public broadcaster NRK that the worst was behind Norway regarding interest rates and inflation. 

No risk of energy rationing

Norway is reliant on hydropower to meet the vast majority of its energy needs. However, much of 2022 saw incredibly low reservoir filling levels, leading to fears that energy would need to be rationed if the situation didn’t improve. 

Luckily the situation did improve in the latter half of 2022, and the fear of energy rationing in 2023 has more or less been eliminated thanks to reservoirs being replenished to near-normal levels by the end of 2022. 

As for electricity prices, they are expected to remain high, though. 

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ECONOMY

‘Turning point’: What the future holds for Norway’s economy

The standstill in Norway's economy may soon be at an end, according to a new report from Norway's national data agency. The agency isn't alone in its optimistic outlook, as the country's PM has said the country is at a 'turning point'.

'Turning point': What the future holds for Norway's economy

Norway’s economy should begin to pick up in the coming months and years after a period of stagnation, according to a national data agency, Statistics Norway, in a forecast on the Norwegian economy.

“With lower interest rates and clear wage growth, household consumption will increase. Economic activity will also pick up as a result of increased public consumption and an increase in housing investment,” said Thomas von Brasch, head of research at Statistics Norway.

The stagnation would likely continue for the rest of 2024 before picking up in 2025 and returning to a more neutral position in 2026.

“The standstill in the Norwegian economy is soon over,” von Brasch said.

After a period of high inflation, peaking at 7.5 percent in October 2022, price rises have begun to moderate. During this period, inflation in Norway was at its highest level since the 1980s.

This is good news for those hoping for lower interest rates, as the central bank had raised rates rapidly to try and control inflation and get it towards a target of two percent.

“Lower inflation at our trading partners will cause inflation here at home to continue to fall. Reduced interest rates internationally also contribute to the policy rate being gradually cut in Norway,” von Brasch said.

After the latest inflation figures for Norway were released, many economists predicted that the first cut would arrive around December. Between May 2023 and May 2024, inflation was measured at 3 percent.

READ ALSO: What Norway’s latest inflation figures mean for your finances

Market rates, the interest rates consumers pay, are expected to fall from around 4.7 percent this year, to 4 percent next year, and 3.5 percent the year after.

Norway’s PM, Jonas Gahr Støre, said the Norwegian economy was at a “turning point”, with the future looking much more positive for those in Norway.

“It is good news for people’s finances and clearly confirms that we are at a turning point in the economy where people can get better advice. Statistics Norway estimates that price growth will continue downward, so interest rates can eventually be lowered. They also expect increased purchasing power for people this year and in the following years. The government aims for people to get better advice,” PM Jonas Gahr Støre told Norwegian newswire NTB.

One factor that had the researchers at Statistics Norway more uncertain was the development of the Norwegian krone.

“The development in the krone exchange rate is important for inflation, among other things through import prices measured in Norwegian kroner. There is great uncertainty surrounding exchange rate movements,” the report read.

However, it added that keeping exchange rates the same in the coming years could be considered a positive development. This may disappoint those who have been negatively affected by a weakened krone.

Still, there was much better news when it comes to wages. Over the past eight years wages have barely grown in real terms, meaning price increases have outpaced wages. Workers in Norway can look forward to real wage increases of around 1.5 percent until 2027.

Unemployment would rise slightly in the coming years, though, from 4 percent currently to 4.2 percent in 2025.

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