Norway government says economy booming, must curb spending
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OSLO, March 14 (Reuters) – The Norwegian economy is booming and public spending must be constrained in order to prevent interest rates from rising even faster than signalled by the central bank, the finance ministry said in a statement on Monday.
Mainland gross domestic product (GDP), excluding the impact from Norway’s oil production, is now expected to grow by 3.6% in 2022, slightly less than the 3.8% forecast made in October.
“Now that the Norwegian economy is booming, we must hold back on fiscal spending. If not, the economy could overheat and give even higher inflation and call for even higher interest rates,” Finance Minister Trygve Slagsvold Vedum said.
Last year the economy grew by 3.9%, the fastest in 14 years as it recovered from the coronavirus pandemic.
“A shortage of labour is leading to mounting pressure. At the same time, the war in Ukraine increases uncertainty in the global economy,” the finance ministry said in a statement ahead of a two-day cabinet meeting.
The government conference will lay the initial foundations for a 2023 fiscal spending plan, due to be unveiled in October.
Mainland GDP is predicted to grow by 2.5% in 2023, the ministry’s forecasts showed.
(Reporting by Terje Solsvik, editing by Nora Buli)
