Wednesday, 16 September 2026
Norway’s economy continued to expand during the first half of 2026, although conditions differed considerably between the energy sector and the rest of the economy. Oil and gas activity generated substantial export income and supported headline economic performance, while growth across mainland Norway remained more moderate as high borrowing costs, inflation and weak construction activity continued to affect households and businesses.
During the second quarter, total GDP increased by 0.7% compared with the previous three months, while the mainland economy expanded by 0.3%. Petroleum activities and ocean transport grew by 1.7% during the quarter, reinforcing the importance of the energy sector to Norway’s overall performance. Compared with a year earlier, mainland GDP was 1.3% higher in Q2.
Domestic demand remained relatively subdued. Household and non-profit consumption declined by 0.2% during Q2 compared with the previous quarter, while government consumption increased by 0.8%. Overall fixed investment rose by 4.4%, although conditions varied considerably between industries. Petroleum investment continued to represent an important source of economic activity as several large energy projects remained under development.
Consumer activity showed some improvement towards the end of H1. Retail sales volumes increased by 1.6% between May and June after falling during the previous month. Spending improved across several categories, including food and beverages, household equipment and recreational products. Household demand nevertheless remained sensitive to high mortgage costs, consumer prices and broader borrowing conditions.
Inflation eased during the closing months of the first half but remained above the central bank’s objective. Consumer prices were 2.7% higher in June than a year earlier, compared with 3.1% in May and 3.4% in April. The measure that removes energy prices and adjusts for changes in taxation was also 2.7%, indicating that underlying price pressures had moderated but had not disappeared.
Borrowing conditions remained restrictive. Norges Bank increased its policy rate from 4.0% to 4.25% in May and kept it at that level in June. The continued presence of inflationary pressure left households, property developers, investors and businesses facing financing costs well above those prevailing before the inflationary period.
The labour market remained relatively resilient despite moderate mainland growth. Unemployment stood at 4.8% during Q2, while the employment rate reached 70.1%. The number of jobs was 0.8% higher than a year earlier and average monthly basic earnings increased by 3.9%, providing some support to household incomes as inflation moderated.
Norway’s international trade position continued to benefit substantially from energy exports. Goods exports reached NOK 158.3 billion in June, 12.5% higher than a year earlier, while imports increased by 2.7% to NOK 96.4 billion. This produced a monthly trade surplus of approximately NOK 61.9 billion, around 32% higher than in June 2025. Oil, natural gas and seafood remained major sources of export revenue, with natural-gas exports alone valued at approximately NOK 52 billion during the month.
Industrial performance also reflected the importance of energy production. Activity across extraction, manufacturing, mining and electricity increased strongly during June compared with May, partly because of higher petroleum output. Manufacturing and mining production was 0.9% higher than a year earlier, while oil and gas extraction recorded considerably stronger growth. The figures underline the different conditions facing Norway’s energy economy and several domestically focused industries.
Housing presented one of the clearest challenges during the first half. Existing dwelling prices were 4.4% higher during Q2 than a year earlier and increased by 0.4% from the previous quarter after seasonal adjustment. Regional differences were substantial. Annual price growth reached 10.9% in Stavanger and 11.3% in Bergen, compared with 2.0% in Trondheim and only 0.8% across Oslo and Bærum.
Prices of newly built homes also continued to rise. New dwelling prices increased by 6.0% during Q2 compared with a year earlier, including a 6.8% increase for detached houses and 5.7% for homes in multi-dwelling developments. At the same time, permits were issued for only 4,604 dwellings during Q2, 10.1% fewer than a year earlier and 9.2% below the previous quarter after seasonal adjustment.
The combination of rising prices and limited new construction creates a longer-term housing supply challenge. High financing and construction costs have made some residential projects difficult to deliver, while continued demand could place further pressure on prices if development remains subdued. Housing availability is particularly important in the larger urban economies, where affordability can also affect labour mobility and the ability of employers to attract workers.
For commercial real estate, the first-half economic environment remained mixed. High interest rates continued to affect transaction pricing, refinancing and development economics, while moderate mainland growth limited the potential for rapid expansion in occupier demand. Norway nevertheless benefits from high employment, substantial energy revenues and a strong external financial position, providing an important degree of economic stability.
The office market is likely to remain selective, with demand concentrated on established employment locations and modern buildings offering efficient operating costs and strong environmental performance. Oslo remains the country’s dominant office market, but slower domestic economic growth means occupiers are likely to remain cautious about taking additional space.
Industrial and logistics property is supported by a different combination of factors. Norway’s geography, dependence on imported goods, energy industries and concentration of population around several major cities create continuing requirements for warehousing, distribution and industrial facilities. Oslo and the surrounding eastern region remain the largest logistics market, while Bergen, Stavanger and Trondheim generate important regional demand. Energy-related activity also supports industrial property along parts of the western coast.
Retail property faces both positive and negative influences. Wage growth and easing inflation can improve household purchasing power, while high mortgage and borrowing costs continue to absorb a significant proportion of disposable income. The improvement in retail sales towards the end of H1 provides some support, although households remain sensitive to prices and financing costs.
The economic outlook remains uncertain. Norges Bank expects mainland GDP to increase by 0.9% during 2026, while total GDP is also forecast to grow by approximately 0.9%. Petroleum investment is projected to decline by around 3.0% as the current development cycle matures. Household consumption is expected to increase by 1.6%, while business investment is forecast to grow by 2.6%. The central bank expects consumer-price inflation of 3.2% for the year, alongside wage growth of approximately 4.5%.
Statistics Norway has a stronger outlook for domestic activity, forecasting mainland GDP growth of 1.7% during 2026 and 2.0% in 2027. It expects total GDP to increase by 1.6% this year, with inflation averaging 3.2% and unemployment around 4.6%. The difference between the forecasts highlights uncertainty surrounding domestic demand, energy markets, international conditions and the future direction of monetary policy.
Norway therefore entered the second half of 2026 with a clear difference between the strength of its energy sector and conditions across the mainland economy. Oil and gas continued to generate substantial export revenues, while domestic economic growth remained modest. Inflation was easing but remained above target, financing costs were high and new housing development remained weak.
For the property sector, these conditions point towards a selective rather than broad-based improvement. Limited residential construction could increase pressure on housing supply, while high financing costs continue to challenge development economics. Commercial property benefits from Norway’s employment base, energy wealth and strong export position, but moderate mainland growth limits the potential for rapid occupier expansion. A stronger real estate recovery will increasingly depend on whether inflation continues to ease and domestic growth improves sufficiently to allow financing conditions to become less restrictive.
Source: CIJ.World Research & Analysis Team
