OECD Economic Surveys: Norway 2016 (eBook)

Oecd (Autor)

eBook Download: EPUB

2016 | 1. Auflage
128 Seiten
OECD Publishing (Verlag)
978-92-64-24955-4 (ISBN)

Infos

This 2016 OECD Economic Survey of Norway examines recent economic developments, policies and prospects. The special chapters cover: Higher education; Agriculture and rural policy.

Textauszug

Assessment and recommendations1

Norway’s economy has been transformed since the discovery of commercially viable offshore oil and gas fields in the late 1960s which helped the country to achieve a high level of GDP per capita (Figure 1). Good macroeconomic management of the oil wealth via the sovereign wealth fund and the associated fiscal rule has helped achieve impressive standards of living across society. Also, inflows of labour from other European Economic Area (EEA) countries have supported activity and reduced the risk of overheating.

Figure 1. Norway’s gross domestic product per capita is high

Source: OECD (2015), “Aggregate National Accounts”, SNA 2008 (or SNA 1993): “Gross domestic product”, OECD National Accounts Statistics (database); OECD (2015), Analytical Database.

StatLink  http://dx.doi.org/10.1787/888933314686

The country scores well in practically every dimension of the OECD’s Better Life Index (Figure 2). Household disposable income ranks third highest in the OECD area and this is echoed in good outcomes in jobs, earnings, and housing. Furthermore, scores relating to subjective well-being, work-life balance and the environment are good. Low levels of inequality and poverty are being driven by strong societal values of inclusiveness and egalitarianism and by other features of the “Nordic model”. In particular, emphasis on the quality of education, encouraging and facilitating the employment of women, well-functioning centralised wage bargaining systems, good legal frameworks for business and high levels of trust in society.

Figure 2. Norway scores well in measures of well-being

1. How to read this figure: each well-being dimension is measured using one to three indications from the OECD Better Life Indicator set with equal weights.

2. Indicators are normalised by re-scaling to be from 0 (worst) to 10 (best).

3. Nordic is a simple average of Denmark, Finland and Sweden.

Source: Calculations based on OECD (2015), “Better Life Index 2015”, OECD Social and Welfare Statistics (database); OECD (2015), “Income distribution”, OECD Social and Welfare Statistics (database).

StatLink  http://dx.doi.org/10.1787/888933314698

Sustaining these outstanding economic and social outcomes is the key priority for Norway’s economic policy makers. The oil-price drop in mid-2014 (Figure 3, Panel A) has served as a timely reminder that a flexible, competitive and productive mainland economy and a floating exchange rate are central to cushioning external shocks and to developing balanced growth once the income from petroleum begins to fade. In this regard, it is of concern that Norway’s mainland economy has experienced a secular decline in productivity growth and loss of international competitiveness due to unit-labour-cost increases over the past 10-15 years (Figure 3, Panels B and C). Against this backdrop, the main messages of this Survey are:

• Continue to ensure that strong macroeconomic policies cushion the Norwegian economy from external shocks, and equitably and sustainably manage its petroleum wealth. This includes a focus on the cost effectiveness of public spending to ensure the now large oil wealth (Figure 3, Panel D) and tax revenue are well used.

• Use structural policies to foster stronger productivity growth and international competitiveness, and to smooth adjustment towards less medium-term dependence on petroleum.

Figure 3. Key challenges for the Norwegian economy

1. Data are smoothed by the Hodrick-Prescott filter.

Source: OECD, Analytical Database; Norwegian Ministry of Finance.

StatLink  http://dx.doi.org/10.1787/888933314708

Chapter 1 explores how to enhance the quality of higher education, a key factor for increasing competitiveness and laying the foundations for sustained and inclusive growth. Chapter 2 examines how costly and distorting farm support can be replaced by measures to diversify rural economies.

Recent macroeconomic developments and near-term prospects underscore the main challenges

Mainland output growth continued to slow in 2015, as the large fall in oil prices in 2014 depressed oil-related activity (Figure 4, Panel A). Petroleum-sector investment, which had risen substantially over the past decade, started declining even before the fall in oil prices due to cost-reduction campaigns by the oil industry and the completion of several large projects (SSB, 2015a) (Figure 4, Panel B). Continued low oil prices since mid-2014 have prompted further cost-cutting and reduced capacity (and incentives) to fund new exploration and development projects throughout the oil industry and this has impacted the mainland economy’s sizeable sector of oil-related companies, many of which operate globally as well as in the North Sea.

Figure 4. Recent macroeconomic developments

1. 2015 annual data are OECD projections.

2. The share of firms reporting that labour supply is a constraint on output growth.

3. CPI adjusted for tax changes and excluding energy products.

4. Ratio of household debt to disposable income. Loan debt for households and non-profit organisations as a percentage of disposable income, adjusted for estimated reinvested dividend income for 2000-05 and redemption/reduction of equity capital for Q1 2006-Q3 2012.

Source: OECD, Analytical Database; OECD (2015), “OECD Economic Outlook No. 98 (Edition 2015/2)”, OECD Economic Outlook: Statistics and Projections (database); Statistics Norway; OECD, Analytical House Price database; Norges Bank (2015), Monetary Policy Report With Financial Stability Assessment, No. 4/15.

StatLink  http://dx.doi.org/10.1787/888933314711

The slowing economy has led to an increase in the rate of unemployment, which went above 4% of the labour force in early 2015 (Figure 4, Panel D). Occupations and regions linked closely to the petroleum sector have been mostly affected (Norges Bank, 2015a). However, consumption is being supported by low interest rates, housing wealth and an expansionary fiscal policy. In addition, low oil prices have brought exchange rate depreciation (Figure 3, Panel A) and slowed wage growth, which is helping competitiveness. Indeed, exports of non-oil goods trended slightly upwards (Figure 4, Panel C). Recent surveys of manufacturing export firms also point to better export prospects (Norges Bank, 2015a). Also, tourism has picked up significantly.

Currency depreciation lifted core consumer-price inflation but the economic downturn is containing inflationary pressures (Figure 4, Panel E). However, house prices continued to rise, though at a more moderate pace, and household debt levels increased to over 200% of disposable income, supported by low interest rates (Figure 4, Panel F).

Economic activity is projected to recover gradually; the latest OECD projection envisages mainland output growth of 1.6% in 2016 and 2.2% in 2017 (Table 1). Accommodative macroeconomic policies, through continued low interest rates and fiscal support, and strong non-oil exports will underpin growth. The government’s budget proposal for 2016 envisages a structural non-oil deficit of 7.1% of trend mainland GDP, which represents 0.7 percentage-point increase on the previous year (Ministry of Finance, 2015a). Non-oil business investment is expected to increase as global demand increases, domestic prospects improve and as firms become more competitive. In the petroleum sector, an expected fall in production will dent total export growth in 2016, although new investment projects will partly offset the decline in ongoing projects.

Table 1. Macroeconomic indicators

Annual percentage change, volume (2013 prices)

	2012 Current prices (billion NOK)	2013	2014	2015	2016	2017

GDP

2 965

1.0

2.2

1.2

1.1

1.9

Mainland GDP

2 295

2.3

2.3

1.3

1.6

2.2

Private consumption

1 176

2.7

1.7

2.4

1.7

2.5

Government...

Produkt-Details

• Erscheint lt. Verlag: 18.1.2016
• Sprache: englisch
• Themenwelt: Sozialwissenschaften ► Politik / Verwaltung ► Staat / Verwaltung
• Themenwelt: Wirtschaft ► Volkswirtschaftslehre ► Wirtschaftspolitik
• ISBN-10: 92-64-24955-9 / 9264249559
• ISBN-13: 978-92-64-24955-4 / 9789264249554