The Norwegian EconomyBy Aslak Molvær, NHO

photo: Svein petter aagardInnovation Norway

Norway – facts and figures

photo: Johan Wildhagen-www.visitnorway

Population: 5 million

Pop. Growth: 1.3 percent (2011)

GDP per capita (PPP): USD 54,200

Unemployment: 3.1 percent (Q3 2012)

photo: Wikimedia

The Norwegian mixed market economy

A free market, but with substantial government ownership and activity

Part of the European Economic Area (EEA), except with regards to fish and agriculture

Tripartism State, political authorities

Employers

Employees

Photo: Norwegian Design Council

The EEA Agreement

Floating currency and inflation targeting

Managing the oil income: The Fiscal Rule

But:- Growing public sector- Lack of investments in R&D and infrastructure- High level of taxation- Low performance in the education system- Lack of labour in the long run

The Norwegian economy of today

Norway – an open economy

Total exports of goods and services: NOK 1141 billion; 42.1 percent of GDP (2011)

Major exports: oil and natural gas, fish and other seafood, heavy machinery, metal, chemical products

Major export markets (2011): EU (84 pct), North America (8 pct), Asia (6.5 pct).

photo: Heidi Widerø/www.visitnorway

Competitive Norwegian industrial clusters

SEA FOOD Fishing,fish farming, equipment

PETROLEUM INDUSTRIESOil and gas companies, offshore industry, offshore service, shipping, petrochemical industries

MARITIME INDUSTRIESShipyards, ship’s gear, offshore, shipping services,maritime R&D

HYDRO ELECTRIC POWER Equipment, power generationpower distribution, metallurgical industries,fertiliser production

FOREST INDUSTRIES Saw mills, wood products, chemical wood pulp, paper industry, special products

New oppurtunities! Growth in the North

Norway – a petroleum economy

1963: Phillips Petroleum knocks on the door

1969: Oil is found in the Norwegian sector

White paper in 1974: How to manage the oil income?

NORSOK standards, focus on ripple effects for the rest of the economy

photo:Statoil

Norway – a petroleum economy

Dutch Disease?

Increased public sector

Decreased productivity

Crowding out of private industry?

A utom atisertboring

B etong -tekno log i

Løsn inger fo rekstrem t k lim a

R eservoar-tekno log i

F ly ter-tekno log i

O n-/o ffshoregassprosessering

H avbunnsproduksjonog prosessering

E lektro oginstrum entering

LN G lagring ogregassifisering

Floatertechnology

Concretetechnology

Arcticsolutions

Reservoirtechnology

LNG storage and regas

Automateddrilling

Onshore and offshore gas processing

Subseasolutions

Electro, instrumentation

40 years later1970’ies

From muscles to brainpower –from shipbuilding to 250,000 jobs in oil & gas

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Investments in the petroleum sector 2000 – 2011. Projections for 2012 and 2013. NOK million, current prices.

Source: Statistisk sentralbyrå

The Norwegian Oil Sector Supply Industry- Turnover in Subsidiaries and Export

Export

Turnover in subsidiaries

Bill

ion

NO

K

Norwegian hourly wage costs compared to trading partnersTrading partners = 100

Source: TBU/NHOHourly wage cost for manufacturing workers in Norway compared to European trading partners (trade-weighted average, trading partners = 100). Estimates for 2012 are based upon the Revised budget 2012 and the Norwegian Krone exchange rate up to and including August 2012. For the remaining of 2012, the exchange rate is assumed to be equal the monthly average for August.

photo: Innovation Norway/Heidi Widerø

Total Norwegian exports by industryBefore and after the petroleum industry

The Government Pension Fund - Global

The Norwegian economy is growing fast

Kilde: Consensus Forecasts, December 12

Economic growth in EU-27Real GDP Growth. Unweighted and weighted after share of Norwegian exports

15

Source: European Commission / NHO

The dual economy

Sectors which are hardly affected by the euro crisis – or not at all

The public sector

Domestic private consumption

The petroleum sector and some other industries (e.g. fish)

Sectors more severely affected by the euro crisis

Traditional manufacturing

Tourist industry (partly)

SMEs (problems with financing)

photo: Pål Bugge/Innovation Norway

NHO's Market IndexAssessment of the current general market situation and future short term market outlook.* Difference between proportion of companies who answered positive and negative.

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Source: NHO* For surveys from the first and second quarters, the outlook for the second half of the year is used, for the third and fourth quarter the next year is used.

NHO Market Index – current situationCompanies divided by their main market sectorsAssessments of the general marked situation at the moment. Difference between positive and negative answers.

Source: NHO*Companies across sectors with more than 25 % of total turnover directed towards either exports or the petroleum sector

The Krone Exchange Rate Against the Euro

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Source: Norges Bank

Exports of traditional goodsSA volume index 2000=100

20

Source: Statistics Norway

Exports of traditional goodsPrice index 2000=100

21

Source: Statistics Norway

Concluding remarks

An open economy – very open to and dependent upon trade

A mixed market economy with a large public sector

The current economic slowdown is affecting us, although less than many other countries

photo: Jens Henrik Nybø/Innovation Norway

Thank you for your attention!

photo: Heidi Widerø/Innovation Norway