www.oecd.org/eco/surveys/economic-survey-norway.htm

OECD ECONOMIC SURVEY OF

NORWAY

Thriving in a changing worldOslo, Tuesday 19 December 2017

OECD

OECD Economics

Norway’s GDP per capita remains impressive

2Source: OECD National Accounts database, and OECD Analytical Database.

GDP per capita, constant USD prices, 2010 PPP

0

10

20

30

40

50

60

70

0

10

20

30

40

50

60

70

1970 72 74 76 78 80 82 84 86 88 90 92 94 96 98 2000 2 4 6 8 10 12 14 16

Th

ou

san

ds

OECD Norway Norway (Mainland)

Thousand Thousand

Inequality is low

3

1. The Gini coefficient ranges from zero to 1, zero indicating all individuals have the same income; 1

indicating one individual receives all income.

Source: OECD Income Distribution Database (IDD).

0.20

0.25

0.30

0.35

0.40

0.45

0.50

NOR SWE DNK DEU FIN FRA OECD

Inequality (Gini coefficient)¹ of market incomeand disposable (net) income

Inequality of market income Inequality of disposable income

OECD Gini index, market income OECD Gini index, disposable income

Employment is a key driver of low inequality and

high well-being

4

0

5

10

15

20

25

DNK NOR FRA SWE DEU FIN EU28

Gender wage gap2015 or latest available

% of male median wage

Real GDP growth is picking up

5Source: OECD Analytical Database; Norges Bank.

-4

-2

0

2

4

6

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Real GDP growth (mainland)

Real GDP (Mainland)

Y-o-Y % change

Labour costs remain high

6

80

100

120

140

160

180

200

220

80

100

120

140

160

180

200

220

2000 2002 2004 2006 2008 2010 2012 2014 2016

Index 2000 = 100Index 2000 = 100

Cost-competitivenessEuro-denominated unit labour cost index

Denmark Norway (Mainland) Sweden

Source: OECD Analytical database, and OECD Economic Outlook database.

Productivity has slowed

7

0.0

0.5

1.0

1.5

2.0

2.5

3.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2000 2002 2004 2006 2008 2010 2012 2014 2016

% change% change

Trend in real labour productivity growthPer hour worked

Norway (mainland) OECD

Source: OECD Analytical database, and OECD Economic Outlook database.

Maintaining macroeconomic and

financial stability

8

Inflation remains well anchored

9

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

%

Long term CPI growth and expectations

Expected inflation 2 years ahead CPI 10-year m.a, annual change

Source: Norges Bank ; OECD analytical database.

Adjustment of the fiscal rule implies an end to

fiscal expansion

10

0

1

2

3

4

5

6

7

8

9

2000 2004 2008 2012 2016 2020 2024

Structural non-oil deficit 3 percent path

% of trend mainland GDP

Source: Ministry of Finance.

Recommendations for macroeconomic policy

1. Normalise the monetary stance as forecast, with rate increases starting in late 2018

2. Focus on restraint in government spending and public-service efficiency in light of the adjusted fiscal rule

11

Household debt remains high

12

100

120

140

160

180

200

220

240

260

100

120

140

160

180

200

220

240

260

2000 2002 2004 2006 2008 2010 2012 2014 2016

Household debt and house prices

Household debt (left) Real house price (right)

% of disposable income Index 2000 = 100

Source: Statistics Norway; Norges Bank ; and OECD Analytical database.

House prices have fallen in recent months,

especially in Oslo

13

Source: Statistic Norway; and Real Estate Norway (Eiendom Norge).

90

100

110

120

130

140

150

90

100

110

120

130

140

150

2014 2015 2016 2017

Index 2014 = 100Index 2014 = 100

Oslo including Bærum (quaterly, existing dwellings)

Norway (monthly)

Recommendation regarding the housing market

• Be prepared to respond to a hard landing in the

housing and debt markets. This should include, as

necessary, delay to monetary policy normalization and the introduction of targeted fiscal policy

14

Improving business policies

15

Norwegian business operates in a high cost

environment

16Source: Eurostat.

Hourly labour costs, 2016

0

10

20

30

40

50

60

0

10

20

30

40

50

60

POL ESP GBR ITA EA19 DEU FIN FRA SWE DNK NOR

EUREUR

There is room to improve regulation

17

0.0

0.5

1.0

1.5

2.0

2.5

3.0

NLD

GB

R

AU

T

DN

K

NZ

L

AU

S

DE

U

SV

K

ITA

ES

T

FIN

PR

T

HU

N

BE

L

CZ

E

JAP

CA

N

ES

P

IRL

LUX

NO

R

FR

A

OE

CD

ISL

CH

E

CH

L

SW

E

US

A

LVA

PO

L

SV

N

GR

C

KO

R

ME

X

ISR

TU

R

OECD Product Market Regulation (PMR) indicator, 2013Scale 0-6 from least to most restrictive

Source: OECD Product Market Regulation Database.

Recommendations for maintaining a successful

business sector

1. Complete the programme of income-tax rate cuts and consider further reductions

2. Continue strengthening competition policy

3. Reduce state stakes in business further

4. Strengthen routes to recovery in the insolvency regime

5. Replace the taxi-licencing system

18

Strengthening skills, encouraging

employment

19

Scores in mathematics and science remain

middle-ranking

20

410

430

450

470

490

510

530

550

2000 2003 2006 2009 2012 2015

B. Mathematics

410

430

450

470

490

510

530

550

2000 2003 2006 2009 2012 2015

A. ReadingAverage PISA score

410

430

450

470

490

510

530

550

2000 2003 2006 2009 2012 2015

C. Sciences

Norway OECDTop 3 OECD Bottom 3 OECD

Source: OECD PISA 2000-2015 Databases.

Recipiency of Disability Benefit remains an issue

21

0.0

0.5

1.0

1.5

2.0

2.5

2008 2017

A. Age 18-34

0

5

10

15

20

25

30

35

40

2008 2017

B. Age 50-67

People on Disability Benefit, % of age category

Source: Norwegian Labour and Welfare Administration (NAV).

Recommendations for maintaining a successful

business sector

1. Raise employer awareness about the incentives to offer apprenticeship places

2. Strengthen employers’ incentives to offer apprenticeship places by reducing apprentice wages or increasing subsidies

3. Press on with reform to sick leave and disability benefit including through a longer employer-financed phase of sick leave and tighter medical

assessment

22

Improving investment in transport

infrastructure

23

Norway invests heavily in transport infrastructure

24

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2000 2005 2010 2015

% of GDP% of GDP

General Government investment in transport

Denmark Norway (Mainland) Sweden

Source: OECD National Accounts database.

Major road projects initiated in the period 2014-17

25

Corridor

Number

of

projects

Net

benefit

(NOK

million)

Cost (NOK

million)

Net Benefit to

Cost ratio

1. Oslo-Svinesund-Kornsjø 1 −860 1830 −0.47

2. Oslo-Ørje/Magnor 2 −1790 4750 −0.38

3. Oslo-Grenland-Kristiansand-Stavanger 7 12080 33890 +0.36

4. Stavanger-Bergen-Ålesund-Trondheim 4 18020 26800 +0.67

5. Oslo-Bergen/Haugesund. Branch via Sogn to Florø 4 −2320 8950 −0.26

6. Oslo-Trondheim. Branches to Måløy, Ålesund, and Kristiansund 3 5210 6500 +0.80

7. Trondheim-Bodø. Branches to the Swedish border 2 −1740 5670 −0.31

8. Bodø-Narvik-Tromsø-Kirkenes. Branches to Lofoten and the

national border2 −530 1890 −0.28

Source: Sager (2016).

Recommendations for maintaining a successful

business sector

1. Strengthen the influence of cost-benefit analysis in project selection

2. Improve checks against cost inflation after projects are selected

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More Information…

www.oecd.org/eco/surveys/economic-survey-norway.htm

OECD

OECD Economics

Disclaimers:

The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without

prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers

and boundaries and to the name of any territory, city or area.

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