The Norwegian Economy
By Aslak Molvær, NHO
photo: Svein petter aagardInnovation Norway
Norway – facts and figures
 Population: 5 million
 Pop. Growth: 1.3 percent (2011)
 GDP per capita (PPP): USD
54,200
 Unemployment: 3.1 percent (Q3
2012)
photo: Johan Wildhagen-www.visitnorway
The Norwegian mixed
market economy
 A free market, but with
substantial government
ownership and activity
 Part of the European Economic
Area (EEA), except with
regards to fish and agriculture
 Tripartism
Employers
State,
political
authorities
Employees
photo: Wikimedia
The Norwegian economy of today
 The EEA Agreement
 Floating currency and
inflation targeting
 Managing the oil income:
The Fiscal Rule
 But:
- Growing public sector
- Lack of investments in R&D and
infrastructure
- High level of taxation
- Low performance in the education
system
- Lack of labour in the long run
Photo: Norwegian Design Council
Norway – an open economy
 Total exports of goods and
services: NOK 1141 billion;
42.1 percent of GDP (2011)
 Major exports: oil and natural
gas, fish and other seafood,
heavy machinery, metal,
chemical products
 Major export markets (2011):
EU (84 pct), North America
(8 pct), Asia (6.5 pct).
photo: Heidi Widerø/www.visitnorway
Competitive Norwegian industrial clusters
SEA FOOD
Fishing,
fish farming,
equipment
MARITIME INDUSTRIES
Shipyards, ship’s gear,
offshore,
shipping services,
maritime R&D
PETROLEUM INDUSTRIES
Oil and gas companies,
offshore industry,
offshore service,
shipping,
petrochemical industries
New oppurtunities!
Growth in the North
HYDRO ELECTRIC POWER
Equipment,
power generation
power distribution,
metallurgical industries,
fertiliser production
FOREST INDUSTRIES
Saw mills, wood products,
chemical wood pulp,
paper industry,
special products
Norway – a petroleum economy
 1963: Phillips Petroleum
knocks on the door
 1969: Oil is found in the
Norwegian sector
 White paper in 1974: How to
manage the oil income?
 NORSOK standards, focus on
ripple effects for the rest of
the economy
Dutch Disease?
 Increased public sector
 Decreased productivity
 Crowding out of private industry?
1000
1000 employees
Norway – a petroleum
economy
800
Public sector
600
400
200
Manufacturing
0
1970 1975 1980 1985 1990 1995 2000 2005
photo:Statoil
From muscles to brainpower –
from shipbuilding to 250,000 jobs in oil & gas
1970’ies
40 years later
FlyterFlyterFloater
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Flyterteknologi
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teknologi
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teknologi
teknologi
teknologi
LNG lagring og
LNG lagring og
LNG
LNGlagring
lagring
og
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og
regassifisering
LNG
storage
regassifisering
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lagring
og
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og
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og
regassifisering
regassifisering
regassifisering
and
regas
regassifisering
regassifisering
Løsninger
Løsningerfor
for
Arctic
Løsninger
for
Løsninger
for
Løsninger
ekstremt
klima
Løsninger
for
ekstremt
klima
Løsninger
for
solutions
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for
ekstremt
klima
ekstremt
klima
ekstremt
ekstremt
klima
ekstremt
ekstremt klima
klima
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boring
Automated
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On-/offshore
Havbunnsproduksjon
Elektro og
On-/offshore
Havbunnsproduksjon
Elektro og
og
On-/offshore
Havbunnsproduksjon
Elektro
On-/offshore
Havbunnsproduksjon
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gassprosessering
og
prosessering
instrumentering
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Havbunnsproduksjon
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og
gassprosessering
og
prosessering
instrumentering
gassprosessering
ogprosessering
prosessering
instrumentering
On-/offshore
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Elektro
gassprosessering
og
instrumentering
gassprosessering
instrumentering
On-/offshore
Havbunnsproduksjon
Elektro og
og
Onshore and
gassprosessering
ogSubsea
prosessering Electro,
instrumentering
gassprosessering
instrumentering
gassprosessering
gassprosessering og
og prosessering
prosessering
instrumentering
offshore gas solutions
processing
instrumentation
Investments in the petroleum sector 2000 – 2011. Projections for
2012 and 2013. NOK million, current prices.
Source: Statistisk sentralbyrå
9
The Norwegian Oil Sector Supply Industry
- Turnover in Subsidiaries and Export
Billion NOK
Export
Turnover in subsidiaries
Norwegian hourly wage costs compared to
trading partners
Trading partners = 100
Source: TBU/NHO
Hourly wage cost for manufacturing workers in Norway compared to European trading partners (trade-weighted average, trading partners = 100).
Estimates for 2012 are based upon the Revised budget 2012 and the Norwegian Krone exchange rate up to and including August 2012. For the
remaining of 2012, the exchange rate is assumed to be equal the monthly average for August.
Total Norwegian exports by industry
Before and after the petroleum industry
photo: Innovation Norway/Heidi Widerø
The Government Pension Fund - Global
Sovereign wealth fund; Currently the largest in the world, by most estimates,
slightly bigger than the United Arab Emirates' fund (ADIA). China's SAFE is number
three. Own some 1 percent of all the publicly listed shares in the world.
Assets worth more than $670 billion (as of December 2012), invested in more than
8,000 companies world wide.
The outflow from the Fund is regulated by the ”Fiscal Rule”. Currently to spend 4 %
of the funds total assets
The Norwegian economy is growing fast
Kilde: Consensus Forecasts, December 12
Economic growth in EU-27
Real GDP Growth. Unweighted and weighted after share of Norwegian exports
Source: European Commission / NHO
15
The dual economy
Sectors which are hardly affected
by the euro crisis – or not at all
Sectors more severely affected
by the euro crisis
 The public sector
 Traditional manufacturing
 Domestic private
consumption
 Tourist industry (partly)
 The petroleum sector and
some other industries (e.g.
fish)
 SMEs (problems with
financing)
photo: Pål Bugge/Innovation Norway
NHO's Market Index
Assessment of the current general market situation and future short term market
outlook.* Difference between proportion of companies who answered positive and
negative.
Source: NHO
* For surveys from the first and second quarters, the outlook for the second half of the year is used, for
the third and fourth quarter the next year is used.
17
NHO Market Index – current situation
Companies divided by their main market sectors
Assessments of the general marked situation at the moment. Difference between positive and negative answers.
*Companies across sectors with more than 25 % of total turnover directed
towards either exports or the petroleum sector
Source: NHO
The Krone Exchange Rate Against the Euro
Source: Norges Bank
19
Exports of traditional goods
SA volume index 2000=100
Source: Statistics Norway
20
Exports of traditional goods
Price index 2000=100
Source: Statistics Norway
21
Concluding remarks
 An open economy – very
open to and dependent upon
trade
 A mixed market economy
with a large public sector
 The current economic
slowdown is affecting us,
although less than many
other countries
photo: Jens Henrik Nybø/Innovation Norway
Thank you for your attention!
photo: Heidi Widerø/Innovation Norway