Norway: Economic and Political Overview
In this page: Economic Outline | Political Outline | COVID-19 Country Response
For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
Norway's Covid-19-led economic downturn remained limited compared to most European countries: after losing only 0.8% in the aftermath of the pandemic, the country’s GDP was estimated at +3% in 2021, thanks to a strong rebound in private consumption and an increase in employment, which offset declining investments. Benefitting from higher oil and gas prices (Norway’s main exports), from 2022 economic output is projected to be running slightly above the pre-pandemic path. The economy is forecast to grow by 4.1% this year, before slowing to 2.9% in 2023 (IMF), although uncertainty remains due to the new waves of the pandemic and to the historically high household debt level.
The general government balance was estimated at -12.6% in 2021 by the IMF, as Norway’s public finances rely heavily on oil and gas output. The projections envisage a substantial decrease in the oil-adjusted fiscal deficit in 2022, with a forecast of -10.7% (followed by -10% in 2023). Norway's government gross debt did not expand substantially in the aftermath of the Covid-19 crisis unlike in the rest of Europe, despite public monetary support and a comprehensive loan programme to the banks. The debt-to-GDP ratio stood at 42.7% in 2021 and is expected to follow a downward trend over the forecast horizon (42.4% and 41.8% in 2022 and 2023, respectively). The value of Norway's Sovereign Wealth Fund remains the world’s largest, being valued at over USD 1.4 trillion at the end of 2021. The Norwegian fund invests in more than 9,100 companies worldwide. Inflation was on an upward trend in 2021 (+2.6% from 1.3% one year earlier), triggering Norges Bank’s Executive Board decision to raise the key policy rate from the historic low of 0.0% to 0.25%. The IMF expects inflation to stabilize around 2% over the forecast period.
Norway is a rich country, with one of the highest GDP per capita in the world (estimated at USD 69,171 PPP in 2021 by the IMF). The nation also scores at the top of the United Nations Development Programme’s Human Development Index ranking. Unemployment grew only slightly in 2021 (at 4.3%), already exceeding pre-pandemic levels. In line with the economic recovery, employment is set to continue increasing, while the rate of unemployment should fall further to 4% this year and 3.9% in 2023 (IMF).
| Main Indicators | 2020 | 2021 (e) | 2022 (e) | 2023 (e) | 2024 (e) |
|---|---|---|---|---|---|
| GDP (billions USD) | 362.20 | 482.18 | 504.70 | 486.37 | 495.14 |
| GDP (Constant Prices, Annual % Change) | -0.7 | 3.9 | 3.6 | 2.6 | 2.2 |
| GDP per Capita (USD) | 67 | 89 | 92 | 88 | 89 |
| General Government Balance (in % of GDP) | -12.3 | -10.1 | -8.6 | -8.1 | -8.2 |
| General Government Gross Debt (in % of GDP) | 46.8 | 43.4 | 40.3 | 39.5 | 39.2 |
| Inflation Rate (%) | 1.3 | 3.5 | 4.7 | 3.8 | 2.7 |
| Unemployment Rate (% of the Labour Force) | 4.6 | 4.4 | 3.9 | 3.8 | 3.7 |
| Current Account (billions USD) | 4.03 | 72.12 | 97.94 | 70.76 | 55.82 |
| Current Account (in % of GDP) | 1.1 | 15.0 | 19.4 | 14.5 | 11.3 |
Source: IMF – World Economic Outlook Database, Latest available data
Note: (e) Estimated Data
Agriculture accounts for 1.9% of GDP and employs 2% of the workforce (World bank, latest data available). Fishing is an important activity as Norway is the world's second-biggest seafood exporter after China. Agricultural subsidies are very significant. The country counts 38,713 agricultural holdings (Statistics Norway) and is more than self-sufficient in animal products, livestock being one of the major agricultural products. However, Norway remains dependent on imports for cereal crops (soybeans, wheat, rapeseed and bananas). About 39% of Norway’s total land area is covered by forests, 12.6 million ha in total.
Industry employs 19.4% of the workforce and represents 25.9% of GDP. Norway’s economy depends on its natural resources and energy sources (oil, gas, hydraulic energy, forests and minerals). Oil rents, which have once dominated the GDP, now provide less than 4% of GDP, well below its peak level in 2000. Manufacturing alone accounts for 6.6% of GDP. Shipbuilding, metals, wood pulp and paper, the chemical industry, machinery and electrical equipment make up Norway’s main manufacturing industries. Norway also has one of the largest and most modern fleets in the world.
The Norwegian service sector is highly developed; it employs over three-quarters of the population (78.5%) and accounts for 60.4% of GDP, a share that has been increasing in recent years. According to the World Travel & Tourism Council (WTTC), travel and tourism in Norway generated, directly and indirectly, roughly 4.6% of GDP in 2020 (latest data available). The Norwegian banking sector is comprised of 134 banks, of which 118 local banks and 16 branches of foreign banks. The market share of the subsidiaries and branches of foreign banks were 24% and 38% in the retail and domestic corporate market, respectively (European Banking Federation, latest data available).
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 2.0 | 19.4 | 78.5 |
| Value Added (in % of GDP) | 1.9 | 25.9 | 60.4 |
| Value Added (Annual % Change) | 0.2 | 3.7 | -2.8 |
Source: World Bank, Latest available data.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
See the country risk analysis provided by Coface.
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
To find out about the latest status of the COVID-19 pandemic evolution and the most up-to-date statistics on the COVID-19 disease in Norway, please consult the official data on the Norwegian Institute of Public Health website. The NIPH also provides a daily epidemiological update.
For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.
To find out about the latest public health situation in Norway and the current sanitary measures in vigour, please consult the website of the Norwegian Institute of Public Health. The national long-term strategy and the plan for handling the COVID-19 pandemic can be consulted on the portal of the Norwegian government.
The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.
The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.
For the up-to-date information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the website of the Norwegian customs authority Toll.
For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to Norway on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
For the information on the economic recovery scheme put in place by the Norwegian government to address the impact of the COVID-19 pandemic on the national economy, please visit the dedicated page on the web portal of the Norwegian government. Further details are available on KPMG's website.
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) taken by the Norwegian government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Norway in the IMF’s Policy Tracker platform.
For the information on the local business support scheme established by the Norwegian government to help small and medium-sized companies to deal with the economic impacts of the COVID-19 epidemic on their activity, please consult the portal of the Ministry of Trade, Industry and Fisheries.
For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.
For the up-to-date information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the website of the Norwegian customs authority Toll.
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