Yesterday, Statistics Norway announced that prices have increased by 6.3 per cent in the last year. Thus, most of us are experiencing a decline in real wages this year. Next year, however, it may turn around. – In our forecasts, wages will rise faster than prices from next year, and in the years ahead. This is what central bank governor Ida Wolden Bache says. At the same time, Bache emphasizes that the forecasts are uncertain, but that it is Norges Bank’s best assessment of the outlook, as they now see it. – The hope you can give Norwegians and Norwegian families into the summer now, is that next year will be better? – Our forecasts mean that employment will remain high, that unemployment will remain low in the years ahead, that we have high activity in the economy and yes, also that wages will rise faster than prices, when we look a little further ahead, says Bache. – And that’s what you believe in? – I believe in our forecasts, says Bache. RISE: Wages will rise faster than prices from next year, says Governor Ida Wolden Bache. Photo: Stian Lysberg Solum / Stian Lysberg Solum Bache also emphasizes that interest rates will rise, and that many people with mortgages will therefore still experience that they are left with less, after the interest has been paid. But Marit Krogstad, whom news meets in the streets of Oslo, is a bit reluctant with optimism. – It’s nice that they think so, but it’s a little worrying with everything that happens in the world. We do not know if it will go as well as it has for the last ten years. So I’m a little worried about that mindset. Krogstad says that even though she has debt, it is not a big concern for her if Norges Bank raises the key interest rate further. – No, I’m not worried about that, it’s fine. We have been so lucky for many, many years now that it has been very low interest rates. But I have not lived beyond my means at that either. – I have such a debt that it goes well in relation to what I earn. – Will vary greatly Anders Johansen, chief strategist at Danske Bank, believes Norges Bank’s forecasts are correct, but is still not as optimistic. – We believe that wages will rise, but not as fast as Norges Bank, and also that inflation will be lower than that, says Johansen. Johansen says we have been through a period of high growth, both in Norway and internationally. Danske Bank envisages that there will continue to be growth in 2023, but that growth will be lower than it has been. NOT AS FAST: We believe wages will rise, but not as fast as Norges Bank, says chief strategist at Danske Bank Norway Anders Johansen. Photo: Danske Bank / Sturlason – We see that there are a number of capacity challenges, due to the high growth that has taken place, and therefore the central banks are tightening, both in Norway, Europe and the USA. This will mean that GDP (gross domestic product, journ.anm.) Growth will be lower in 2023 than it has been in 2022, says Johansen. – Will people experience having more to do next year? – It will vary very much from household to household. Some households, which have a lot of debt, they will experience significantly less to spend with next year, says Johansen. – While some of the households, which have little debt or no debt, and thus only money in a savings account, they will actually have more to spend, due to the rising interest rates, says Johansen. Johansen says Danske Bank continues to view the Norwegian economy positively. – We still believe that it will grow, and wage growth will still be good, seen in a historical context, says Johansen. – It will be tighter Oddmund Berg, macroeconomist at DNB, says DNB thinks Norges Bank’s forecasts seem reasonable, and that they point to good factors as to why there may be increased wage growth. – There is a very tight labor market now, there is very low unemployment. In addition, we see companies themselves report fairly good profitability and opportunities to provide wage growth. We probably believe that it is a reasonable assumption that we will have higher wage growth into 2023, says Berg. Berg points out that the special thing about the economy in 2023 is high inflation. He says it is difficult to predict whether wage growth will compensate for inflation. – But it may well be that we get real wage growth next year, says Berg. REASONABLE ASSUMPTION: – We probably believe that it is a reasonable assumption that we will have higher wage growth into 2023, says macroeconomist at DNB Oddmund Berg. Photo: Stig B. Fiksdal / Stig B. Fiksdal The increased interest rates help to eat up a good part of people’s budgets, says Berg. Especially for those who have a lot of debt. – We will probably have a decline in what is called disposable income or disposable real income, says Berg. Disposable income or disposable real income how much money households have left, after we have taken into account debt and the like. – It will be a little tighter for Norwegian households in 2023. It will be a little tougher, a little less to deal with, says Berg. At the same time, there is great variation among households in how much debt they have. – So here there are underlying big differences, between different types of employees, in terms of whether you want to get better or worse next year, says Berg. Berg says DNB is quite positive about the Norwegian economy in 2023. – We have had a good period on the way out of the pandemic, so it looks pretty good, says Berg.
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Wages will rise faster than prices from next year – news Norway – Overview of news from different parts of the country
