OECD Economic Survey of Norway 2022 - Presentation

2022 OECD ECONOMIC SURVEY OF NORWAY

PREPARING FOR FUTURE CHALLENGES 22 February 2022

@OECD Economics

@OECD https://www.oecd.org/economy/norway-economic-snapshot/

Most of the population is fully vaccinated against COVID-19 Share of people fully vaccinated against COVID-19, 7-day moving average % 80 Norway

70

European Union

OECD

60 50 40 30 20 10 0 Jan-21

Feb-21

Mar-21

Apr-21

May-21

Jun-21

Jul-21

Aug-21

Sep-21

Oct-21

Nov-21

Dec-21

Jan-22

Feb-22

Mar-22

Source: Our World in Data.

2

The recovery is set to continue Mainland real GDP, index 2019 Q4 = 100, s.a.

110

Pre-crisis growth path

108

December 2021 Economic Outlook

Provisional update

106 104 102 100 98 96 94 92 90

2019

2020

2021

2022

2023

Note: The pre-crisis growth path is based on the November 2019 OECD Economic Outlook projection, with linear extrapolation.

Source: OECD Economic Outlook 106 and 110 (databases); and provisional updates.

3

The economic outlook remains solid Annual percentage change

2020

2021

2022

2023

Gross domestic product (mainland)

-2.3

4.2

3.7

2.2

Unemployment rate (%)

4.6

4.3

3.5

3.2

Inflation (CPI)

1.3

3.5

2.5

1.5

Source: OECD Secretariat provisional projection.

4

Inflation has been pushed up by rising energy prices Energy price index, January 2020 = 100 160 Norway

150

Other Nordics

OECD-Europe

140 130 120 110 100 90 80 70

Jan-20

Mar-20

May-20

Jul-20

Sep-20

Nov-20

Jan-21

Mar-21

May-21

Jul-21

Sep-21

Nov-21

Note: OECD-Europe includes OECD countries that are also European countries. Geographic definition of Europe including Turkey.

Source: OECD (2022), Main Economic Indicators (database).

5

The 2022 budget deficit will be below target Projection of the structural non-oil deficit, % of trend mainland GDP

12

Fiscal rule

11

10

Estimate

9

8

7

6

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Note: The mainland structural deficit refers to the cyclically-adjusted total budget surplus excluding petroleum and oil fund revenues.

Fiscal rule refers to the “3 percent path”, which is the guideline spending of 3% of the value of the wealth fund.

Source: Ministry of Finance, National Budget 2022.

6

Ensuring fiscal sustainability

7

Public spending remains high % of GDP 70

2020

2019

60 50 40 30 20 10 0

Note: Norway total general government disbursements as % of mainland GDP. Source: OECD (2021), OECD Economic Outlook (database).

8

Ensuring affordable housing

9

House prices have surged Index 2010 = 100, s.a.

240 Oslo

220

Norway

OECD

200 180 160 140 120 100 80 2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Source: Calculations based on Real Estate Norway (Eiendom Norge) data; OECD (2021), Analytical house prices database.

2021

2022 10

Household debt is elevated Household indebtedness ratio, % of gross disposable income, 2021Q3 or latest 240 210 180 150 120 90 60 30 0

Source: OECD dashboard of household statistics.

11

Household rent costs are significant Median rent burden, % of disposable income, 2019 or latest year available 35 30 25 20 15 10 5 0

Note: Rent burden includes private market and subsidised rents.

Source: OECD Affordable Housing database.

12

Property taxes are underutilised Recurrent taxes on immovable property, % of total taxation, 2020 or latest available year % 12 10 8 6 4 2 0

Source: OECD (2021), OECD Revenue Statistics (database).

13

Strengthening productivity and employment

14

Productivity growth is edging up but remains relatively low Output per hour worked, trend % change 3.0 2.5 Norway (Mainland)

OECD

2.0 1.5 1.0 0.5 0.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Note: Labour productivity for the OECD is measured as output per worker instead of per hour worked.

Source: OECD (2021), OECD Economic Outlook (database).

15

Labour force participation has fallen Labour force participation rate, 15-64 years 84 Average of top 5 OECD countries

Norway

83

Average of top 10 OECD countries

82 81 80

Rank: 3 ​

​ ​

79 ​

78

​

​ ​

​

​ ​

​

​ ​

​

​ ​

​

77 76

​

​ Rank: 13

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Note: Norway's rank amongst the OECD countries is shown at the beginning and at the end of the period.

Source: OECD (2021), Employment and Labour Market Statistics.

2015

2016

2017

2018

2019

2020

16

Moving to a greener economy

17

Renewable energy is significant Renewable energy share, in % of energy supply % 60 Norway

OECD

50

40

30

20

10

0

2000

2001

2002

2003

2004

2005

Source: OECD Environment Statistics database.

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020 18

The emission-reduction challenge is sizeable Greenhouse gas emissions, million tons of CO2-equivalent

MtCO2-equivalent 60

50

Projections under current policies

40

Trajectory to 2030 target

30

Trajectory to 2050 target

20

10

0

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

Note: Projections under current implemented policies do not include reductions that are intended via participation in the EU-ETS. Norway’s emissions targets are in “gross” terms, meaning notably that the CO2 absorption from forestry is not included.

Source: Climate Action Tracker, Country Assessments 2020 - http://climateactiontracker.org.

19

Key messages Maintain a close watch on price and wage inflation Retain a prudent fiscal strategy Address housing market imbalances Strengthen productivity and employment Make green transition happen 20

For more information

https://www.oecd.org/economy/norway-economic-snapshot/ OECD OECD Economics Disclaimer: 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.

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