Mainland Norway is experiencing modest growth, supported by low unemployment, easing inflation, and gradually declining interest rates, according to a report published by Nordic Credit Rating (NCR) today. Despite this positive macroeconomic backdrop, operating balances remain under pressure due to structural cost and demographic differences, which are not fully offset by income equalisation. The 2026 fiscal plan aims to strengthen municipal finances through increased state transfers and oil fund contributions, but challenges persist across municipalities.
"Norwegian municipalities face fiscal strain despite increased state transfers", said NCR credit analyst Halvard Bustnes. "Structural imbalances persist, limiting financial recovery."
The economy has avoided contraction, with projections indicating rigid growth in mainland demand, including household and public consumption. However, growth in the petroleum sector investment is expected to decline, and export growth is projected to contract. While mainland GDP growth supports employment and tax revenues, it is unlikely to significantly boost balance sheets due to strong wage growth, demographic pressures, and high financing costs.
Municipal finances are prioritised in the 2026 fiscal plan, with increased state grants and a more expansionary fiscal stance. Despite these measures, financial challenges remain for some municipalities due to structural pressures and reliance on central government support.
Contacts:
Halvard Bustnes, analyst, +4747995727, halvard.bustnes@nordiccreditrating.com
Geir Kristiansen, analyst, +4790784593, geir.kristiansen@nordiccreditrating.com