Mainland Norway (i.e., not including offshore oil and gas extraction) is booming. Real GDP growth is projected to have reached 3.75% in 2006, and to moderate slightly in 2007 and 2008 reflecting the completion of major oil investment projects, reduced monetary stimulus and slowing household demand. Although the output gap has become increasingly positive, underlying inflation has remained relatively low and below the Norges Bank target.
After more than three years of growth above potential, there are signs of overheating. Rising bottlenecks and increasing risks of wage inflation call for a stricter fiscal policy, a faster return to a neutral monetary stance and new reforms to boost labour supply.
|Population (000s), 2005||4 623|
|Area (000 sq km)||324|
|GDP (Billion USD), 2005||199.5|
|Life expectancy at birth (Women, Men), 2004 ||82.3, 77.5|
|Total labour force (000s), 2005||2 400|
|Government type||Constitutional Monarchy|
|Indicators||% change unless otherwise indicated|
|Household savings ratio||5.2||5.6||5.9|
|Consumer price index||2.2||1.7||2.6|
|Unemployment rate (%)||3.6||3.3||3.4|
|General government financial balance|
|Current account balance (% GDP)||20.0||20.2||21.5|
No. 258/259, December 2006