Norway Economy Facts
Norway is one of the richest countries in the world and has an extensive welfare system and generally high living standards among the population. The backbone of the economy is a lucrative oil and natural gas extraction combined with fishing, shipping and tourism. Since the 1990s, the Norwegian state has saved huge sums of oil money in a fund for future needs. The money has also been used to avoid Norway being too negatively affected by the downturn in the world economy.
Norway is a high-tech industrialized country with a business sector dominated by oil and gas production. Other important industries are hydroelectric power generation, ore mining, wood and paper industry as well as an extensive service sector, characterized by tourism, shipping and other trade. Although the importance of shipping operations to the economy has declined significantly since the 1970s, Norway is still one of the world’s largest rednational nations.
- Countryaah.com: Major imports by Norway, covering a full list of top products imported by the country and trade value for each product category.
The oil and natural gas are extracted on offshore platforms and contribute about a quarter of the gross domestic product (GDP). The mainland economy accounts for the remaining three quarters. During periods of high oil prices, Norway has invested a lot of money in developing the oil and gas industry, and when several large gas fields have been expanded at the same time, the economy has been threatened by overheating. But the strong Norwegian currency, the krone, has counteracted that rising wage and energy costs have pushed inflation too high. The state has also made money from taxes, fees and royalties from the oil industry.
A small domestic market, a large import demand and a dependence on oil and gas income make the Norwegian economy vulnerable. When oil prices fall, the generally large surplus in the trade and current account can quickly be turned into deficit. In 2015, the bourgeois government had to make an extra withdrawal from the oil fund to cover the 2016 budget after oil prices on the world market fell sharply from autumn 2014.
The Oil Fund was established in 1990 and was then called the Government Petroleum Fund. The fund, which is now called the Government Pension Fund – Global, will serve as a reserve when oil prices fall sharply and guarantee pension payments when the oil and gas fall. Since 1995, most of the state’s oil revenues are allocated, while the budget is to be financed by the mainland economy. After hard pressure to use more oil money for welfare, the parliament decided in 2001 that an annual return from the oil fund of 4 percent may be used in the state budget. However, this proportion has been exceeded for several years.
- Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including NOR which represents the country of Norway. Check findjobdescriptions to learn more about Norway.
Thanks to the oil money, Norway has paid off the external debt and the government debt is low. The funded money also made the country perform well during the international financial crisis 2008-2009.
Fast growing oil fund
The value of the fund has risen very sharply since the 1990s. This means that the government can transfer more oil money to the state budget and still utilize a smaller share of the fund’s return than before. Today, the Norwegian Oil Fund is the world’s largest government investment fund and has served as a model for several other countries that have found oil and whose income to the Treasury has increased rapidly.
Compared to other Nordic countries, the state and political influence over the Norwegian economy has long been strong. In 1998, the telecommunications market was opened to competition and in 2001 the state-owned oil company Statoil was launched. Governments led by the Labor Party have carried out the most privatizations, while the central parties have often been hesitant. The opposition to the sale of state property has mainly come from Venstre and the Nationalist Progress Party.
Surplus in the trade balance
Since Norway has a small domestic market, foreign trade is essential for the economy. The country exports around half of the goods and services produced. Since 1990, Norway has had a surplus in the trade balance with foreign countries, ie exports have been greater than imports.
The oil and natural gas industry accounts for just over two-thirds of the value of goods exports. Other important export goods are seafood and metals. Four-fifths of Norway’s exports go to the EU. Most oil and gas are sold to the UK. Germany, the Netherlands and France are also major exporting countries.
Most of the import goods also come from the EU. The largest importing countries are Sweden, Germany, China and the United Kingdom. Of Sweden, Norway mainly buys cars, machines, wood and paper. Private border trade in cheaper food and spirits in Sweden is extensive.
Norway also has a significant trade in services, with international shipping providing the largest revenue.
FACTS – FINANCE
GDP per person
US $ 81,807 (2018)
US $ 434,751 M (2018)
1.4 percent (2018)
Agriculture’s share of GDP
1.8 percent (2018)
Manufacturing industry’s share of GDP
5.7 percent (2018)
The service sector’s share of GDP
55.6 percent (2018)
2.3 percent (2019)
Government debt’s share of GDP
40.0 percent (2018)
Right largest party
Høyre’s voter support increased significantly during the year. In a poll, the Conservative Party gets the biggest with 28 percent of the vote, compared to 26 percent for the Labor Party.
Controversial election of Nobel laureates
The Norwegian Nobel Committee’s decision to award the Peace Prize to imprisoned Chinese dissident Liu Xiaobo has led to harsh reactions from the Chinese authorities, which halt Norwegian official visits and postpone a trade agreement with Norway.
Strong EU resistance
An opinion poll shows a historically strong opposition to Norwegian membership in the EU. Almost 57 per cent of Norwegians are against Norway joining the EU, while just over 30 percent are in favor. The right is the only party with a majority of EU-positive sympathizers.