Norway Charts a Course Through Economic Challenges and Technological Change

As 2026 begins, Norway's economy is navigating a landscape marked by global uncertainty and the rapid advance of artificial intelligence, according to the latest annual address by the Norges Bank Governor.

Despite fears that rising US-China trade tensions and historic tariff levels would trigger a global recession, the expected downturn has not materialized. This resilience is credited to companies maneuvering around tariffs, limited retaliation from other nations, and strong economic responses: Chinese exports diversified and grew, European economies saw boosts from defense spending, and in the US, substantial investment in AI and digital infrastructure powered growth. Norwegian exporters, though facing increased competition from Chinese firms, have largely weathered these trade shifts, while rising wages and lower interest rates are fueling robust household consumption both at home and abroad.

Looking forward, Norway anticipates continued moderate growth and increasing household purchasing power. However, the Governor warned against complacency, noting persistent risks if global uncertainty or confidence in critical financial institutions erodes. The evolving role of artificial intelligence is central to this outlook. AI is presenting both opportunities—such as potential productivity booms and medical breakthroughs—and dangers, including autonomous weaponry and the spread of disinformation. Estimates for AI-driven productivity gains vary widely; while some predict substantial long-term benefits, others warn of near-term disruptions in the labor market and uncertainty about overall economic impact.

The Governor emphasized that Norway is well positioned to capitalize on AI's opportunities due to its knowledge-based industries and high wages, though realizing these gains depends on institutional adaptability and continued investment in skills and technology. For now, broad labor market trends do not show dramatic AI-driven job losses, but demand for new competencies is growing.

Alongside technological transformation, Norges Bank faces complex dilemmas surrounding the management of the Government Pension Fund Global. Tensions have emerged between domestic expectations for responsible investment and the fund's international activities, especially after controversy over holdings related to global conflicts and ethical standards. The Bank welcomes an ongoing government review of these frameworks to keep risk, transparency, and long-term returns aligned with societal values.

On the money front, digital assets like stablecoins have increased in prominence but remain marginal as everyday payment tools in Norway. Traditional money and electronic payments, underpinned by robust banking systems and regulation, still dominate. Norges Bank is monitoring global trends, including the potential for central bank digital currencies, but sees no immediate need for public blockchain-based money—though readiness to adapt remains a priority.

Against this backdrop, Norway's monetary policy remains anchored to its inflation-targeting framework, providing economic stability amid global storms and technological upheaval. While inflation is easing from recent peaks, the central bank is committed to ensuring that inflation returns to its target, maintaining prudent monetary policy to support employment and price stability.

The Governor concluded by reaffirming Norges Bank's commitment to maintaining trust in the Norwegian krone and the broader monetary system—highlighting that, even as new technologies and geopolitical dynamics reshape the landscape, sound institutions and adaptive policy will be crucial for securing Norway’s economic future.