Norway - Overview
Business languages: Norwegian & English.
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In 2013, growth slowed down (2%) because of the high business costs and a high level of household debt acting as impediments to growht. For 2014, growth is predicted to reach 2.5%, its main drivers being the budget policy, low interest rates and a strong demand in the oil sector.
Despite being highly dependent on oil prices, the Norwegian economy is very stable with positive prospects. The main challenge for the government is to maintain a stable growth in an adverse international environment while reducing any weaknesses resulting from the tax burden, high levels of household debt, and raised real estate prices.
In 2013, inflation remained stable at around 2.%, the real estate market was more calm and household consumption slowed down. The program of the government emphasizes employment, the environment, and the reform of the education and healthcare system. The 2014 budget, which is still marked by fiscal prudents, was revised at the end of 2013 when the new conservative government came to power. It plans to increase the use of oil revenues to finance various tax relief measures. The government has prioritized infrastructure spending, measures to stimulate competitiveness, growth and production. The country must deal with the question of how to pay for pensions in the future.
Norway is a rich country, with the second highest rate of PNB per capita in the world (55,6000 USD in terms of purchasing power parity). The country also holds first place in the United Nations Development Program’s human development index. Contrary to initial fears, unemployment was maintained during the crisis and has stabilized at a low rate (3.5% of the active population). However, the country has a large number of individuals outside the labour market (around 8%) due to disability or on long-term medical leave.
Norway’s economy relies on its natural resources and energy sources (oil, gas, hydraulic energy, forests, and minerals). Oil production dominates the economy, making up nearly one quarter of the GNP. Norway is also a major producer and exporter of natural gas. The political consensus is to save oil and gas revenues for future generations, so that Norway has one of the largest sovereign wealth funds in the world. Shipbuilding, metals, wood pulp and paper, chemical industry, machinery, and electrical equipment make up Norway’s main manufacturing industries. Norway also has one of the largest and most modern fleets in the world.
The service sector is highly developed, it employs three quarters of the population and accounts nearly 60% of GDP.
Foreign trade overview
Traditionally, the country exports energy-intensive products and imports high-technology items. Its main trade partners are European Union nations. The country is the third largest exporter of oil, the biggest natural gas supplier for Western Europe, and the premier fish supplier in the world. Overall, Norway ranks among the 30 biggest global exporters. Industrial products (ships, oil platforms, etc.) constitute close to 10% of total exports. Norway mainly imports manufactured items (machinery, transporters, information technology), which accounts for 40% of all imports.
Norway’s trade surplus is considerable. The country’s trade balance structurally positive; this trend is expected to continue during the next few years. In January 2014, the trade surplus reached its monthly record level of 5.8b EUR, which was almost 42% more compared to the same period last year, thanks to large oil and gas exports combined with strong exports of goods.