IMF: In the midst of a healthy recovery

A mission from the International Monetary Fund (IMF) presented today its concluding statement after visiting Oslo to discuss recent economic developments and Norway’s economic policy.

The IMF mission predicts that mainland GDP will grow by around 2½ percent this year and next and sees the economy to be on the verge of full employment. It concludes that expansionary policies deployed during the downturn following the fall in oil prices was well-adapted and should now be unwound.

“The IMF mission’s assessment of the favourable development in the Norwegian economy aligns well with our own view. I am pleased to see that the Government is commended for appropriately targeting a neutral fiscal stance in the revised budget presented in mid-May”, says Finance Minister Siv Jensen.

The IMF points at the risk posed to the economy by rising house prices and elevated household debt. To contain risk, the mission underlines the need to maintain prudential measures and complement these with risk-reducing policies.

“I share the mission’s view on the risk to financial stability arising from high and increasing household debt. The Government has implemented a number of prudential measures. I take note of the recommendation to extend the mortgage regulations introduced last year. Their view serves as valuable input to our own assessment that will be presented later this month”, says the Finance Minister.

The IMF mission emphasizes that looking beyond the short-term, Norway faces challenges ahead. Population ageing and lower labour productivity growth will weigh on economic growth and public finances in the future. The mission argues that economic policy should aim at consolidating petroleum revenue spending and normalizing the monetary policy going forward. The Government’s initiative to strengthen efficiency in the public sector is noted as a welcomed step. Efforts to sustain high labour participation will be important in coming years.

The delegation was headed by Mission Chief Jacques Miniane.

 

Further reading:

• IMF: Concluding statement from the IMF mission (June 7, 2018)
• IMF:  Executive Board Concludes 2018 Article IV Consultation with Norway (September 17, 2018)
• Webcast from the presentation