Economic Survey of Norway 2005: Key issues and challenges

The following OECD assessment and recommendations summarise Chapter 1 of the  Economic Survey of Norway 2005 published on 8 August 2005.

What are Norway's current strenghts and challenges?

The Norwegian economy is in fine form at present. Per capita incomes are high, rising briskly, and evenly spread. Competition from abroad and at home is encouraging strong productivity gains and keeping inflation very low. The operations of the Petroleum Fund are insulating the exchange rate from swelling oil export revenues, and the associated fiscal rule is ensuring that most of them are saved. Although unemployment is falling only slowly from its comparatively low level, total hours worked have expanded.

Norwegian mainland economic cycles

Source: OECD, Medium Term Baseline, June 2005.

Sources of real national income growth
Annual growth rates

Source: OECD, Analytical Database.

Four concerns trouble this otherwise benign picture:

• Robust growth could turn into overheating, especially if oil investments continue to rise strongly, though foreign demand presents a downside risk;
• Oil euphoria and political pressures could result in fiscal policy becoming too expansionary in the near term and unsustainable in the long term;
• The numbers of people of working age on sick leave or receiving disability pensions have climbed to very high levels;
• The current public pension system is clearly unsustainable in the longer term, and even if proposed reforms are fully implemented, the increase in spending on pensions and health will outstrip any likely rise in revenue from the Petroleum Fund under the fiscal rule.

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Return to the Economic Survey of Norway 2005 homepage

A printer-friendly Policy Brief (pdf format) can also be downloaded. It contains the OECD assessment and recommendations, but not all of the charts included on the above pages.

To access the full version of the OECD Economic Survey of  Norway:

• Readers at subscribing institutions can go to SourceOECD, our online library.
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• Government officials can go to OLISnet's Publication Locator.
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For further information please contact the Norway Desk at the OECD Economics Department at webmaster@oecd.org. 

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• Go to the homepage of all  Economic Surveys and Country Surveillance.
• Go to the list of recent Norway surveys.
• Go to the OECD Economics Department homepage.
• Go to the OECD Norway website.