By Terje Solsvik

OSLO (Reuters – Capacity problems in Norway’s economy are causing slowdowns in business growth. The survey, conducted quarterly by the central bank of businesses, was released Tuesday.

Economists stated that while the survey may provide some ammunition for an interest rate hike as early as next week (as long planned by Norges Bank), a recent rise in coronavirus infections as well as new restrictions to curb this disease could trigger a reassessment.

Contacts expect slower growth in the future, even though demand is increasing with the reopening society. “Over half of contacts report that they have capacity limitations,” said the central bank in a statement attached to the survey.

Some contacts say that outlooks are unusually uncertain. According to it, the uncertainties are related to “the evolution of pandemics, shortages in raw materials, freight challenges and production bottlenecks amongst suppliers”.

According to this survey which was done in October’s last week and November’s first two weeks, wages are forecast to increase by 3.0% and 3.3% respectively next year.

Norges Bank stated on Nov. 4, that it will raise interest rates Dec. 16, and three more times in 2022, amid rising economic activity. However, some analysts believe the Omicron coronavirus variation could cause a revision of any of these hikes.

Handelsbanken sent out a note to their clients saying that “Next week’s policy rate meeting is going to be an exciting one.”

The government will present additional tightening measures for reducing COVID-19 infected later Tuesday.

Nordea Markets claimed that the economy “screams for higher rates”, however, it cautioned that such a move may never happen.

Nordea stated, “With the Omicron virus spreading in Norway and tighter containment measures set to be announced today, we’re more uncertain than ever about how Norges Bank will summarize it all at its meeting next week.”

The news caused the crown currency to weaken slightly, but it soon recovered and traded largely unchanged at 10.20 euros per euro in 1052 GMT.