Norway: Slightly more expansionary budget – Nordea Markets


According to Erik Johannes Bruce, analyst at Nordea Markets, Norway’s revised government budget is expansionary and more than assumed in the budget from last autumn and is also slightly more expansionary than assumed by Norges Bank.

Key Quotes

“The budget indicator in the revised budget increases by 0.5% as % of (trend) mainland GDP. That means the budget impulse will be 0,5%. Norges Bank have assumed a budget impulse of 0.2% point. In other words, the budget is 0,3%-p more expansionary than expected.”

“Equally important for Norges Bank’s view is that underlying growth in government spending is revised up from 1.4% from the 2018 estimate to now 2%. That probably means Norges Bank will raise its forecast for public sector demand from the current 1.4% to now 2%.”

“Today’s budget will most likely contribute to a higher rate path in the coming June report. But we will not overdo the effect.”

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