Stronger growth, lower unemployment and a more sustainable welfare state

"The positive development in the Norwegian economy confirms the merits of our economic policy agenda. The Government has led the country through challenging times. When the oil price drop hit the economy, we used the fiscal budget to curb unemployment and to promote restructuring and new growth. The revised budget paves way for a continued positive development", says Minister of Finance Siv Jensen (The Progress Party).

The Government upholds the neutral fiscal stance adopted last autumn. The use of petroleum revenues is estimated at NOK 225.5 billion in 2018, which is equivalent to 2.7 per cent of the capital of the Government Pension Fund Global. The real, underlying growth in fiscal spending is estimated at 1.7 per cent.

In the 2018 budget, the focus on education, transport, health and high quality local government services continues, as does the upgrading of Norway’s defence and infrastructure.

"The Government lowers taxes, strengthens welfare, ensures national security and takes steps to create more profitable employment opportunities. By making the welfare state more sustainable, we are also preparing our country for the future. We are building a more resilient and adaptive economy and at the same time accommodating for a more climate and environmental friendly society and economy, We want to ensure that our society is a good place to live – both today and for the future", says Minister Jensen.

More information on the Norwegian Fiscal Policy Framework 

 

Table 1 Key figures for the Norwegian economy¹

	Billion NOK2
	2017		2017	2018	2019
Private consumption	1 474,7		2,3	2,6	2,9
Public consumption	790,6		2,0	1,4	--
Gross fixed investment	784,2		3,5	3,3	3,4
Of which: Petroleum extraction and pipeline transport	149,5		-4,0	5,2	8,0
Business sector Mainland Norway	255,3		5,1	8,8	5,4
Housing	203,4		7,1	-5,2	-1,7
Public sector	178,6		5,8	1,6	--
Demand from Mainland Norway3	2 902,6		3,0	2,2	2,3
Exports	1 148,2		0,8	2,5	2,2
Of which: Crude oil and natural gas	441,8		1,9	-2,3	-3,0
Goods except oil and gas	381,5		2,2	4,6	4,9
Services except oil, gas and shipping	224,9		-2,2	9,1	6,8
Imports	1 082,2		2,2	4,0	3,8
Gross domestic product	3 279,4		1,8	1,9	1,9
Of which: Mainland Norway	2 803,8		1,8	2,5	2,6
Other key figures:
Employment, persons (percentage growth)			1,1	1,3	1,1
Unemployment rate, LFS (level)			4,2	3,8	3,7
Unemployment rate, registered (level)4			2,7	2,3	2,2
Annual wage			2,3	2,8	--
Consumer price index (CPI)			1,8	2,1	1,7
Underlying inflation (CPI-ATE)			1,4	1,6	2,0
Crude oil price, NOK per barrel (level)			445	519	484
Three-month money market rates, pct5			0,9	1,1	1,4
Import-weighted exchange rate (yearly change in pct.)6			-0,8	0,9	1,0
Growth in GDP, Norwegian trading partners7			2,8	2,8	2,4

1) Percentage change from previous year unless otherwise stated.
2) Preliminary national accounts in 2017-prices.
3) Excluding inventory changes.
4) Measured as per cent of the LFS labour force.
5) Technically calculated using forward prices in April.
6) Positive number indicates a depreciation of the krone.
7) Norway’s 25 largest trading partners weighted by share of traditional export.

Sources: Statistics Norway, Norwegian Labour and Welfare Administration, Norges Bank, Reuters, Macrobond, ICE and Ministry of Finance

 

Key figures for the Fiscal Budget and Government Pension Fund. NOK billion

	2016	2017	2018
1. Fiscal Budget
Total revenues	1 162.5	1 225.9	1 304.4
Revenues from petroleum activities	152.6	194.4	249.3
Revenues excl. petroleum activities	1 009.9	1 031.5	1 055.1
Total expenditures	1 246.1	1 280.9	1 325.5
Expenditures on petroleum activities	27.8	26.6	25.0
Expenditures excl. petroleum activities	1 218.3	1 254.3	1 300.5
Fiscal budget surplus before transfers from the Pension Fund Global	-83.6	-55.0	-21.1
Net revenues from petroleum activities	124.8	167.8	224.3
=  Non-oil budget surplus	-208.4	-222.8	-245.4
+  Transfers from the Pension Fund Global	212.5	231.4	245.4
=  Fiscal Budget surplus	4.1	8.6	0.0
2. Government Pension Fund
Net transfer to the Pension Fund Global	-87.7	-63.5	-21.1
+  Interest and dividends on the Pension Fund	196.6	203.6	211.6
3. Fiscal Budget and Government Pension Fund consolidated surplus	113.0	148.6	190.5

Source: Ministry of Finance.

 

General government financial balance. NOK million

	2016	2017	2018
Central government financial balance	137 206	163 271	223 457
Fiscal Budget surplus and Surplus in Government Pension Fund	113 020	148 646	190 537
Non-oil budget surplus	-208 388	-222 826	-245 412
Net revenues from petroleum activities	124 779	167 847	224 349
Interest and dividends on the Pension Fund	196 629	203 625	211 600
Surplus in other central government and social security accounts	1 470	1 500	1 507
Definitional differences between Fiscal Budget and national accounts1	22 717	13 125	31 413
+  Local government financial balance	-12 710	-16 933	-20 728
=  General government financial balance	124 496	146 339	202 730
In per cent of GDP	4.0	4.5	5.9

1) Includes central government accrued but not recorded taxes. Direct investments in state enterprises, including government petroleum activities, is defined as financial investments in the national accounts.

Sources: Statistics Norway and Ministry of Finance.