Economy of Norway

Economy - overview: The Norwegian economy is a prosperous bastion of welfare capitalism[?], featuring a combination of free market activity and government intervention. The government controls key areas, such as the vital petroleum sector (through large-scale state enterprises), and extensively subsidizes agriculture, fishing, and areas with sparse resources. The extensive welfare system helps propel public sector expenditures to more than 50% of GDP. A major shipping nation, with a high dependence on international trade, Norway is basically an exporter of raw materials and semiprocessed goods. The country is richly endowed with natural resources - petroleum, hydropower, fish, forests, and minerals - and is highly dependent on its oil production and international oil prices. Only Saudi Arabia exports more oil than Norway. Norway imports more than half its food needs. Norway opted to stay out of the European Union after referendums in September 1972 and November 1994. Growth was a meager 0.8% in 1999 because of weak private consumption and anemic investment activity in the oil and other sectors. Growth should pick up in 2000, perhaps to 2.7%. Despite their high per capita income and generous welfare benefits, Norwegians worry about that time in the next two decades when the oil and gas begin to run out.

Norway is one of the world's richest countries in per capita terms. It has an important stake in promoting a liberal environment for foreign trade. Its large shipping fleet is one of the most modern among maritime nations. Metals, pulp and paper products, chemicals, shipbuilding, and fishing are the most significant traditional industries.

Norway's emergence as a major oil and gas producer in the mid-1970s transformed the economy. Large sums of investment capital poured into the offshore oil sector, leading to greater increases in Norwegian production costs and wages than in the rest of western Europe up to the time of the global recovery of the mid-1980s. The influx of oil revenue also permitted Norway to expand an already extensive social welfare system. Norway has established a state Petroleum Fund[?] which reached $67 billion at the end of 2001. The fund primarily will be used to help finance government programs once oil and gas resources become depleted. Norway is currently enjoying large foreign trade surpluses thanks to high oil prices. Unemployment remains currently low (3%-4% range), and the prospects for economic growth are encouraging thanks to the government's stimulative fiscal policy and economic recovery in the United States and Europe.

Norway voted against joining the European Union (EU) in a 1994 referendum. With the exception of the agricultural and fisheries sectors, however, Norway enjoys free trade with the EU under the framework of the European Economic Area. This agreement aims to apply the four freedoms of the EU's internal market (goods, persons, services, and capital) to Norway. As a result, Norway normally adopts and implements most EU directives. Norwegian monetary policy is aimed at maintaining a stable exchange rate for the krone against European currencies, of which the "Euro" is a key operating parameter. Norway is not a member of the EU's Economic and Monetary Union and does not have a fixed exchange rate. Its principle trading partners are in the EU; the United States ranks sixth.

Energy Resources
Offshore hydrocarbon deposits were discovered in the 1960s, and development began in the 1970s. The growth of the petroleum sector has contributed significantly to Norwegian economic vitality. Current petroleum production capacity is more than 3 million barrels per day. Production has increased rapidly during the past several years as new fields are opened. Total production in 2001 was about 251 million cubic meters of oil equivalents, nearly 79% of which was crude oil. Hydropower provides nearly all of Norway's electricity, and all of the gas and most of the oil produced is exported. Production increased significantly in the 1990s as new fields come onstream.

Norway is the world's third-largest oil exporter and provides much of western Europe's crude oil and gas requirements. In 2001, Norwegian oil and gas exports accounted for 57% of total merchandise exports. In addition, offshore exploration and production have stimulated onshore economic activities. Foreign companies, including many American ones, participate actively in the petroleum sector.

The Norwegian telephone system has been privatised, and the largest telecommunications company (formerly government owned) is now known as Telenor.

GDP: purchasing power parity - $143 billion (2002 est.)

GDP - real growth rate: 1.6% (2002 est.)

GDP - per capita: purchasing power parity - $31,800 (2002 est.)

GDP - composition by sector:
agriculture: 2%
industry: 31%
services: 67% (2000)

Population below poverty line: NA%

Household income or consumption by percentage share:
lowest 10%: 4.1%
highest 10%: 21.2% (1991)

Inflation rate (consumer prices): 2.8% (1999 est.)

Labor force: 2.7 million (1999 est.)

Labor force - by occupation: services 74%, industry 22%, agriculture, forestry, and fishing 4% (1995)

Unemployment rate: 3.9% (2002 est.)

Budget:
revenues: $71.7 billion
expenditures: $57.6 billion, including capital expenditures of $NA (2000 est.)

Industries: petroleum and gas, food processing, shipbuilding[?], pulp and paper products, metals, chemical, timber, mining, textiles, fishing

Industrial production growth rate: 0.7% (1999 est.)

Electricity - production: 115.485 billion kWh (1998)

Electricity - production by source:
fossil fuel: 0.58%
hydro: 99.16%
nuclear: 0%
other: 0.26% (1998)

Electricity - consumption: 111.001 TWh (1998)

Electricity - exports: 4.4 TWh (1998)

Electricity - imports: 8 TWh (1998)

Agriculture - products: barley, other grains, potatoes; beef, milk; fish

Exports: $47.3 billion (f.o.b., 1999 est.)

Exports - commodities: petroleum and petroleum products, machinery and equipment, metals, chemicals, ships, fish

Exports - partners: European Union 77% (United Kingdom 17%, Germany 12%, Netherlands 10%, Sweden 10%, France 8%), United States 7% (1998)

Imports: $38.6 billion (f.o.b., 1999 est.)

Imports - commodities: machinery and equipment, chemicals, metals, foodstuffs

Imports - partners: European Union 69% (Sweden 15%, Germany 14%, United Kingdom 10%, Denmark 7%), United States 7%, Japan 4% (1998)

Debt - external: $0 (Norway is a net external creditor)

Economic aid - donor: ODA, $1.4 billion (1998)

Currency: 1 Norwegian Krone (NOK) = 100 oere

Exchange rates: Norwegian kroner (NKr) per US$1 - 8.0129 (January 2000), 7.7992 (1999), 7.5451 (1998), 7.0734 (1997), 6.4498 (1996), 6.3352 (1995)

Fiscal year: calendar year