OECD ECONOMIC SURVEY OF NORWAY Thriving in a changing world Oslo, Tuesday 19 December 2017
www.oecd.org/eco/surveys/economic-survey-norway.htm
OECD Economics OECD
GDP per capita, constant USD prices, 2010 PPP
Thousand 70 OECD
60
Norway
Thousand 70
Norway (Mainland)
60
50
50
40
40
30
30
20
20
10
10
0
1970 72
74
76
78
80
82
84
86
88
90
92
94
96
98 2000
Source: OECD National Accounts database, and OECD Analytical Database.
2
4
6
8
10
12
14
16
0
2
Milliers
Norway’s GDP per capita remains impressive
Inequality is low Inequality (Gini coefficient)ยน of market income and disposable (net) income 0,50
Inequality of market income
Inequality of disposable income
OECD Gini index, market income
OECD Gini index, disposable income
0,45 0,40 0,35 0,30 0,25 0,20
NOR
SWE
DNK
DEU
FIN
FRA
OECD
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).
3
Employment is a key driver of low inequality and high well-being Gender wage gap 2015 or latest available % of male median wage 25
20 15 10
5 0
DNK
NOR
FRA
SWE
DEU
FIN
EU28
4
Real GDP growth is picking up
Real GDP growth (mainland)
Y-o-Y % change 6
4 2 0 -2 -4
Real GDP (Mainland) 2008
2009
2010
2011
Source: OECD Analytical Database; Norges Bank.
2012
2013
2014
2015
2016
2017
5
Labour costs remain high Cost-competitiveness Euro-denominated unit labour cost index Index 2000 = 100 220
Index 2000 = 100 220 Denmark
200
Norway (Mainland)
Sweden
200
180
180
160
160
140
140
120
120
100
100
80
2000
2002
2004
2006
2008
2010
Source: OECD Analytical database, and OECD Economic Outlook database.
2012
2014
2016
80
6
Productivity has slowed Trend in real labour productivity growth Per hour worked
% change 3,0
Norway (mainland)
% change 3,0
OECD
2,5
2,5
2,0
2,0
1,5
1,5
1,0
1,0
0,5
0,5
0,0
2000
2002
2004
2006
2008
2010
Source: OECD Analytical database, and OECD Economic Outlook database.
2012
2014
2016
0,0
7
Maintaining macroeconomic and financial stability
8
Inflation remains well anchored
Long term CPI growth and expectations % 3,5 Expected inflation 2 years ahead
CPI 10-year m.a, annual change
3,0
2,5 2,0 1,5
1,0 0,5 0,0
2008
2009
2010
2011
Source: Norges Bank ; OECD analytical database.
2012
2013
2014
2015
2016
2017
9
Adjustment of the fiscal rule implies an end to fiscal expansion % of trend mainland GDP 9 Structural non-oil deficit 8
3 percent path
7 6
5 4 3 2
1 0 2000
2004
Source: Ministry of Finance.
2008
2012
2016
2020
2024
10
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 Household debt and house prices % of disposable income 260 240
Household debt (left)
Index 2000 = 100 260 240
Real house price (right)
220
220
200
200
180
180
160
160
140
140
120
120
100
2000
2002
2004
2006
2008
2010
Source: Statistics Norway; Norges Bank ; and OECD Analytical database.
2012
2014
2016
100
12
House prices have fallen in recent months, especially in Oslo
Index 2014 = 100 150
140
Index 2014 = 100 150
Oslo including BĂŚrum (quaterly, existing dwellings) Norway (monthly)
140
130
130
120
120
110
110
100
100
90
2014
2015
Source: Statistic Norway; and Real Estate Norway (Eiendom Norge).
2016
2017
90
13
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 Hourly labour costs, 2016
EUR 60
EUR 60
50
50
40
40
30
30
20
20
10
10
0
POL
Source: Eurostat.
ESP
GBR
ITA
EA19
DEU
FIN
FRA
SWE
DNK
NOR
0
16
There is room to improve regulation
3,0
OECD Product Market Regulation (PMR) indicator, 2013 Scale 0-6 from least to most restrictive
2,5 2,0 1,5 1,0
0,0
NLD GBR AUT DNK NZL AUS DEU SVK ITA EST FIN PRT HUN BEL CZE JAP CAN ESP IRL LUX NOR FRA OECD ISL CHE CHL SWE USA LVA POL SVN GRC KOR MEX ISR TUR
0,5
Source: OECD Product Market Regulation Database.
17
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 Norway Top 3 OECD
OECD Bottom 3 OECD C. Sciences
A. Reading Average PISA score 550
550
550
530
530
530
510
510
510
490
490
490
470
470
470
450
450
450
430
430
430
410
2000 2003 2006 2009 2012 2015
B. Mathematics
410
Source: OECD PISA 2000-2015 Databases.
2000 2003 2006 2009 2012 2015
410
2000
2003
2006
2009
2012
2015
20
Recipiency of Disability Benefit remains an issue People on Disability Benefit, % of age category A. Age 18-34
B. Age 50-67
2,5
40 35
2,0
30 25
1,5
20
1,0
15 10
0,5
5 0,0 2008
2017
Source: Norwegian Labour and Welfare Administration (NAV).
0 2008
2017
21
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 employerfinanced phase of sick leave and tighter medical assessment
22
Improving investment in transport infrastructure
23
Norway invests heavily in transport infrastructure General Government investment in transport % of GDP 2,0 1,8 1,6 1,4 1,2 1,0 0,8 0,6 0,4 0,2 0,0 2000
Denmark
Norway (Mainland)
2005
Source: OECD National Accounts database.
Sweden
2010
% of GDP 2,0 1,8 1,6 1,4 1,2 1,0 0,8 0,6 0,4 0,2 0,0 2015
24
Major road projects initiated in the period 2014-17 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 border
2
−530
1890
−0.28
Corridor
Source: Sager (2016).
25
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
26
More Information‌ 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.
www.oecd.org/eco/surveys/economic-survey-norway.htm
OECD Economics OECD
27