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The economy is projected to strengthen gradually thanks to stronger growth of private consumption and both petroleum and non-oil investment. Employment growth will pick up and increasing activity will lift consumer price inflation from its current low level.
Despite low oil prices, growth has remained positive thanks to accommodative monetary and fiscal policies. The adjusted fiscal rule – budgets should aim for structural deficits at 3% of the value of the oil fund – appropriately implies a broadly neutral fiscal stance going forward. Improving the business environment, stronger competition, and better skills and education are key for raising growth potential and maintaining inclusiveness.
Norway has successfully sustained an egalitarian social and economic model, especially for women and vulnerable families. Comprehensive social programmes have protected Norwegians from the adverse effects of globalisation. However, the model involves substantial public spending and consequently high tax rates, which are a challenge for competitiveness and trade in the global economy. However, Norway has substantial scope for delivering its comprehensive public services and infrastructure investments for less cost, providing room to lower taxes.
Economic Survey of Norway (survey page)