Norwegian mainland GDP is expected to grow around 3.75% this year and next, while unemployment will fall to low levels over the next year, the Ministry of Finance said Tuesday.
According to the government’s main scenario, the country will gain control of Covid-19 through vaccinations in the coming months, but the speed of economic recovery will depend on infection rates, vaccinations, and how early containment measures can be phased out, it said.
“The pandemic still weighs on the Norwegian economy,” the ministry said ahead of its revised national budget.
“However, growth may be strong from the second half of this year. Lower infection rates and a rising share of the population being vaccinated give reason for optimism, although uncertainty remains high,” it said.
Government spending of oil revenue is now estimated at 402.6 billion Norwegian kroner ($48.68 billion), almost NOK90 billion more than originally proposed in the 2021 budget last autumn, as it continued providing extraordinary economic support measures related to the pandemic.
The fiscal impulse, which measures the difference in spending of oil revenue from 2020 to 2021 as a share of mainland Norway trend GDP, is estimated at 0.6%, it said.