Budgetary discipline vital
Since mid-2003, mainland Norway (i.e., not counting the oil and shipping sectors) has experienced a robust cyclical upswing, booming at nearly 4% in 2005 thanks to strong domestic demand (Overall GDP grew by 2.4%). Growth is projected to slow towards potential in 2006 and ease further in 2007 in response to the withdrawal of monetary stimulus.
With oil revenues surging and pressures for higher public spending rising in 2006, it will become increasingly important to adhere to strict budgetary discipline. The revised 2006 budget from the newly elected government implies a stabilisation of the non-oil structural deficit as a share of mainland GDP. Gathering inflationary pressures call for a return to a neutral monetary stance.
| Population (000s), 2004 | 4 592 |
| Area (000 sq km) | 324 |
| Currency | Krone |
| GDP (Billion USD), 2004 | 250.1 |
| Life expectancy at birth (Women, Men), 2003 | 81.9, 77.0 |
| Total labour force (000s), 2004 | 2 382 |
| Government type | Constitutional Monarchy |
| Indicators | % change unless otherwise indicated |
|---|
| 2005 | 2006 | 2007 |
|---|
| GDP growth | 2.4 | 2.2 | 1.8 |
| Mainland | 3.7 | 2.8 | 2.5 |
| Consumer price index | 1.6 | 2.2 | 2.4 |
| Short-term interest rate (%) | 2.2 | 3.5 | 4.7 |
| Unemployment rate (%) | 4.6 | 3.1 | 3.8 |
| General government financial balance (% GDP) | 15.3 | 17.0 | 17.0 |
| Current account balance (% GDP) | 16.1 | 16.3 | 16.6 |
Source: OECD©
OECD Observer, No. 252/253, November 2005
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