Norges Bank

Press release

Regional Network: Capacity constraints and high inflation weigh on growth outlook

According to Regional Network contacts, activity rose through spring following the removal of containment measures earlier this year. Contacts expect growth to slow over the next six months. High inflation, shortages of both intermediate goods and labour are weakening the outlook. Moreover, a number of contacts expect that higher interest rates will have a dampening effect on demand. The war in Ukraine is leading to heightened uncertainty about the economic outlook.

In May, more than six in ten enterprises reported capacity constraints, the highest share since autumn 2007. In addition to logistical challenges and a shortage of intermediate goods, enterprises also report shortages of qualified labour.

Contacts have revised up their estimate for annual wage growth in 2022 to 3.9% from 3.7% in February. The rise in prices has picked up and is the strongest measured since the start of the Regional Network survey in 2002. Enterprises nevertheless expect an even stronger rise ahead.

Over the past three months, activity growth among service and oil service enterprises has been solid. On the other hand, growth has declined in manufacturing and construction, while retail trade turnover has fallen considerably.

Retail trade contacts expect sales volumes to fall further through summer and into autumn, and construction contacts expect growth to level off. Services contacts expect slower growth ahead, while manufacturing contacts expect slightly more activity growth.


Regional Network Report 2/2022


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Published 14 June 2022 10:00
Published 14 June 2022 10:00