Map of mortgage defaults 20088/16/2023 ![]() ![]() At the same time, there are signs that some areas of the economy are cooling down, in the housing market, for example, where prices fell in autumn. Activity in the Norwegian economy is high, and unemployment is at a historically low level. Central banks have raised policy rates to dampen inflation. Along with strong demand for goods and services and supply-side constraints owing in part to the pandemic, this has led to a surge in consumer prices globally and in Norway. ![]() Russia’s invasion of Ukraine and the decline in Russian gas supplies to Europe have resulted in high energy prices. The global growth and inflation outlook is highly uncertain. It is now especially important that the financial system remains resilient so that it can perform its tasks effectively also in the event of severe economic downturns and crises. Solid profitability, capital adequacy and liquidity ensure that banks are resilient, with ample capacity to absorb losses and deal with market stress. The Norwegian financial system has so far weathered the substantial volatility in financial markets. Financial system vulnerabilities, such as the considerable rise in property prices in recent years and high debt levels among households, may amplify an economic downturn. The risk of a downturn has increased, and the financial stability outlook has weakened. There is substantial uncertainty about the economic outlook and about how economic agents will respond to higher interest rates and increased costs. ![]() There are considerable spillovers in both Europe and globally from the ongoing war in Ukraine and the after-effects of the Covid-19 pandemic. ![]()
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