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Mainland output growth will remain robust in the first half of 2018, boosted by the increase in the global oil price but held back by a slowdown in housing construction. Output growth will then moderate. The unemployment rate will decrease further, while price and wage inflation will rise.
The switch from an expansionary to a neutral fiscal stance as implied by the adjusted fiscal rule is appropriate given the economy's cyclical position. Achieving the switch will bolster policy credibility. The central bank has signalled that it will increase the policy rate in autumn this year, which is appropriate. Structural reforms should remain focused on improving the business environment, including lighter taxation financed by greater public-spending efficiency.
Economic Survey of Norway (survey page)