Norway Economic Growth: Q1 Slowdown Forecast

The Economic Institute predicts that Sweden’s calendar-adjusted GDP will increase by 2.2 percent this year and 2.6 percent next year. Earlier forecasts, from December, read 2.7 percent and 2.3 percent, respectively.

This year and next year, CPIF inflation will continue to be somewhat lower than the inflation target of 2 percent. However, the higher oil prices are estimated to increase inflation by 0.6 percentage points in 2026 and 0.2 percentage points in 2027.

The Economic Institute’s forecast for CPIF is now at 1.7 percent this year, to be compared with the previous forecast of 0.9 percent from December. Next year will see CPIF inflation of 1.6 percent (previously 1.8).

The recovery in the labor market is taking longer and it will take until the end of 2027 before unemployment has decreased to an approximately normal level. The Norwegian Institute of Economic Research forecasts an unemployment rate of 8.4 percent this year and 7.8 percent next year.

The Riksbank is predicted to raise the interest rate at the end of 2026, which is a repeat of the previous assessment from December.

“The forecast rests on the assumption that the macroeconomic effects of the war in the Middle East will be small and gradually begin to fade after the summer. If this were not the case, the negative effects of the war could be significantly more extensive, as shown in an alternative scenario,” writes the Institute of Economics.