{ "title": "IMF Executive Board Concludes 2023 Article IV Consultation with Norway", "publication": "IMF News, July 26, 2023", "sourceUrl": "https://www.imf.org/en/news/articles/2023/07/25/pr23274-norway-imf-exec-board-concludes-2023-arti-iv-consult", "canonical": "https://www.imf.org/en/news/articles/2023/07/25/pr23274-norway-imf-exec-board-concludes-2023-arti-iv-consult", "overlayPath": "/en/news/articles/2023/07/25/pr23274-norway-imf-exec-board-concludes-2023-arti-iv-consult/index.md", "summary": "On July 24, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation19F21F with Norway and endorsed the staff appraisal without a meeting. 22F Norway grew strongly in 2022 but the pace of output growth receded somewhat this year.", "publishDate": "2023-07-26", "sections": [ { "heading": "Overview", "content": "- On July 24, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Norway and endorsed the staff appraisal without a meeting.\n- Norway grew strongly in 2022 but the pace of output growth receded somewhat in 2023.\n- Record-high energy and food prices together with much higher interest rates put pressure on households’ purchasing power.\n- Mainland GDP growth is still expected to be positive, supported by strong business investment and exports.\n- Norges Bank raised the policy rate to 3.75 percent by June 2023 after 9 policy rate hikes over 2022–23.\n- Inflation has been stubborn, attributed in part to the weak krona and tight labor markets." }, { "heading": "Executive Board Assessment — Key Findings", "content": "- Norway experienced one of the highest growth rates among advanced economies in 2022; risks remain balanced.\n- Windfall gains from high petroleum and natural gas prices have so far countered global headwinds.\n- The external position in 2022 was moderately stronger than the level implied by medium-term fundamentals and desirable policies.\n- The fiscal position is strong, underpinned by very low public debt and high financial assets.\n- In the near term, the fiscal stance should be more supportive of disinflation efforts; the structural non-oil deficit in the revised budget results in a mildly expansionary fiscal stance, contributing to higher aggregate demand.\n- Spending on energy subsidies is projected to decline this year due to lower electricity prices; potential savings could be realized by narrowing coverage and calibrating support to help only vulnerable households.\n- Over the medium term, aging-related spending pressures require additional measures to make room for new investment and promote climate initiatives.\n- Proposals by the Expert Committee on Tax Reform could help make the tax system simpler and more efficient.\n- Suggestions by the Pension Commission to link retirement age limits to life expectancy would benefit sustainability and labor force participation, but changes should be preceded by a comprehensive reform of Norway’s disability benefits." }, { "heading": "Monetary Policy and Inflation", "content": "- Further monetary policy tightening is needed as inflation risks are to the upside.\n- Rationale:\n - GDP growth and the output gap are projected to be positive in 2023.\n - The labor market is still tight.\n - Consumption, backed by savings accumulated during the pandemic, is still resilient.\n - Elevated inflation expectations, currency weakness, and broad-based inflation pose upside risks.\n- Objective: Contain demand and durably bring down inflation to the 2 percent target to contribute to high and stable output and employment.\n- Communication: Continue to clearly communicate how economic developments affect the current and future policy stance given uncertainties about policy transmission." }, { "heading": "Financial Stability and Macroprudential Policy", "content": "- The banking system is strong but tightening global conditions pose risks.\n- Risks to financial stability appear broadly manageable, but continued vigilance is needed given heightened uncertainty.\n- Macroprudential recommendations:\n - Further broaden the toolkit, such as gradually introducing a sectoral systemic risk or countercyclical buffer for CRE.\n - Consider making the limits on the size of mortgage loans relative to value permanent, given high household debt and elevated house prices.\n- Cyber risk: Strengthen resilience to cyber-attacks; Norges Bank together with the FSA rolled out the TIBER (Threat Intelligence-Based Ethical Red-teaming) framework.\n- AML/CFT: Improvements are ongoing; implement recommendations from a recently concluded IMF assessment of regional cross-border threats and vulnerabilities to further enhance supervision." }, { "heading": "Structural Reforms and Labor Market", "content": "- Progress on structural reforms has been piecemeal.\n- Measures taken:\n - Increased vocational training.\n - Planned introduction of a youth guarantee scheme.\n - Increased spending on retraining; effectiveness should continue to be assessed as it has not led to a decline in benefit recipients.\n- Disability benefits:\n - Participation in the generous disability benefit system remains very high, draining public finances and reducing labor market supply.\n - Comprehensive reform of disability benefits is recommended prior to implementing pension age changes.\n- Housing affordability has become more prominent under high inflation and rising interest rates." }, { "heading": "Climate Policy", "content": "- Norway continues important efforts in climate mitigation and adaptation.\n- Initiatives:\n - Introduced a schedule of carbon-price increases.\n - Launched large-scale publicly supported projects for carbon-capture and storage.\n- Further efforts are needed to fulfil Norway’s 2030 ambition under the Paris Agreement." }, { "heading": "Selected Economic Indicators and Projections (2020–28)", "content": "- Population (2022): 5.4 million\n- Quota (3754.7 mil. SDR/0.78 percent of total)\n- Per capita GDP (2022): US$ 106,328.4\n- Literacy: 100 percent\n- Main products and exports: Oil, natural gas, fish (primarily salmon)\n\n- Real Economy (Real GDP change in percent)1/:\n - 2020: -1.3\n - 2021: 3.9\n - 2022: 3.3\n - 2023: 2.1\n - 2024: 2.5\n - 2025: 1.8\n - 2026: 1.5\n - 2027: 1.4\n\n- Real mainland GDP (change in percent):\n - 2020: -2.8\n - 2021: 4.2\n - 2022: 3.8\n - 2023: 1.9\n - 2024: 2.0\n\n- Final Domestic demand:\n - 2020: -3.9\n - 2021: 4.0\n - 2022: 4.8\n - 2023: 0.9\n - 2024: 1.6\n\n- Private consumption:\n - 2020: -6.2\n - 2021: 4.4\n - 2022: 6.9\n - 2023: 0.6\n - 2024: 1.1\n\n- Public consumption:\n - 2020: -0.5\n - 2021: 5.0\n - 2022: 0.1\n - 2023: 1.7\n\n- Gross fixed capital formation:\n - 2020: -3.1\n - 2021: 6.7\n - 2022: 0.5\n - 2023: 2.4\n - 2024: 2.2\n\n- Exports:\n - 2020: -9.9\n - 2021: 5.9\n - 2022: 11.0\n - 2023: 3.2\n - 2024: 3.0\n - 2025: 2.9\n\n- Imports:\n - 2020: -10.5\n - 2021: 2.7\n - 2022: 11.5\n - 2023: 2.3\n\n- Unemployment rate (percent of labor force):\n - 2020: 4.6\n - 2021: 3.6\n\n- Output gap (mainland economy, - implies output below potential):\n - 2020: -0.7\n - 2021: -0.2\n - 2022: 0.0\n\n- CPI (average):\n - 2020: 1.3\n - 2021: 3.5\n - 2022: 5.8\n - 2023: 2.6\n\n- Structural non-oil balance (percent of mainland trend GDP)2/:\n - 2020: -11.7\n - 2021: -10.8\n - 2022: -9.8\n - 2023: -10.3\n - 2024: -10.1\n\n- Fiscal impulse:\n - 2020: -0.9\n - 2021: -1.0\n - 2022: -0.1\n\n- In percent of Pension Fund Global Capital3/:\n - 2020: -3.7\n - 2021: -3.3\n - 2022: -3.0\n - 2023: -2.7\n - 2024: -2.5\n - 2025: -2.4\n - 2026: -2.3\n\n- Gross Public Debt (percent of GDP):\n - 2020: 46.1\n - 2021: 42.8\n - 2022: 37.2\n - 2023: 38.8\n - 2024: 38.7\n - 2025: 38.4\n - 2026: 38.3\n - 2027: 37.8\n - 2028: 37.3\n\n- Money and credit (end of period, 12-month percent change):\n - Broad money, M2:\n - 2020: 12.1\n - 2021: 10.4\n - 2022: 5.6\n - Domestic credit, C2:\n - 2020: 4.9\n\n- Interest Rates (year average, in percent):\n - Three-month interbank rate:\n - 2020: 0.4\n - 2021: 0.8\n - Ten-year government bond yield: (values not provided)\n\n- Balance of Payments (Percent of total GDP):\n - Current account balance:\n - 2020: 13.6\n - 2021: 30.4\n - 2022: 23.5\n - 2023: 21.3\n - 2024: 19.7\n - 2025: 17.9\n - 2026: 16.5\n - 2027: 14.9\n - Balance of goods and services (percent of mainland GDP):\n - 2020: -1.1\n - 2021: 16.6\n - 2022: 44.2\n - 2023: 33.1\n - 2024: 29.7\n - 2025: 27.0\n - 2026: 24.2\n - 2027: 21.9\n - 2028: 19.4\n\n- Terms of trade (change in percent):\n - 2020: -16.1\n - 2021: 43.3\n - 2022: 45.1\n - 2023: -10.4\n - 2024: -5.2\n - 2025: -4.2\n - 2026: -5.4\n - 2027: -4.8\n - 2028: -5.0\n\n- International reserves (end of period, in billions of US dollars):\n - 2020: 73.6\n - 2021: 83.0\n - 2022: 72.1\n\n- Gross national saving:\n - 2020: 32.5\n - 2021: 39.2\n - 2022: 51.0\n - 2023: 46.0\n - 2024: 44.7\n - 2025: 43.6\n - 2026: 42.1\n - 2027: 41.0\n - 2028: 39.7\n\n- Gross domestic investment:\n - 2020: 31.4\n - 2021: 25.6\n - 2022: 20.6\n - 2023: 22.4\n - 2024: 23.4\n - 2025: 23.9\n - 2026: 24.3\n - 2027: 24.5\n - 2028: 24.8\n\n- Exchange Rates (end of period):\n - Bilateral rate (NOK/USD), end-of-period:\n - 2020: 9.4\n - 2021: 8.6\n - 2022: 9.6\n - Nominal effective rate (2010=100):\n - 2020: 76.2\n - 2021: 80.5\n - 2022: 79.9\n - Real effective rate (2010=100):\n - 2020: 78.1\n - 2021: 83.1\n - 2022: 80.8\n\n- Memo: Nominal GDP (in Billions of US Dollars):\n - 2020: 367.6\n - 2021: 490.3\n - 2022: 579.4\n - 2023: 524.9\n - 2024: 527.6\n - 2025: 534.2\n - 2026: 536.6\n - 2027: 549.5\n - 2028: 561.0\n\nNotes:\n- 1/ Based on market prices which include \"taxes on products, including VAT, less subsidies on products.\"\n- 2/ Authorities' key fiscal policy variable; excludes oil-related revenue and expenditure, GPFG income, as well as cyclical effects. Non-oil GDP trend estimated by staff.\n- 3/ Over-the-cycle deficit target: 3 percent of Government Pension Fund Global.\n\nSource: IMF Executive Board Concludes 2023 Article IV Consultation with Norway (Press Release No. 23/274).\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Norway and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2023/07/25/pr23274-norway-imf-exec-board-concludes-2023-arti-iv-consult" } ], "bullets": [ "[Markdown version](/en/news/articles/2023/07/25/pr23274-norway-imf-exec-board-concludes-2023-arti-iv-consult/index.md)", "[Structured JSON version](/en/news/articles/2023/07/25/pr23274-norway-imf-exec-board-concludes-2023-arti-iv-consult/index.json)", "[Bundle manifest](/en/news/articles/2023/07/25/pr23274-norway-imf-exec-board-concludes-2023-arti-iv-consult/bundle-manifest.json)", "Published: July 26, 2023", "On July 24, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Norway and endorsed the staff appraisal without a meeting.", "Norway grew strongly in 2022 but the pace of output growth receded somewhat in 2023.", "Record-high energy and food prices together with much higher interest rates put pressure on households’ purchasing power.", "Mainland GDP growth is still expected to be positive, supported by strong business investment and exports.", "Norges Bank raised the policy rate to 3.75 percent by June 2023 after 9 policy rate hikes over 2022–23.", "Inflation has been stubborn, attributed in part to the weak krona and tight labor markets.", "Norway experienced one of the highest growth rates among advanced economies in 2022; risks remain balanced.", "Windfall gains from high petroleum and natural gas prices have so far countered global headwinds.", "The external position in 2022 was moderately stronger than the level implied by medium-term fundamentals and desirable policies.", "The fiscal position is strong, underpinned by very low public debt and high financial assets.", "In the near term, the fiscal stance should be more supportive of disinflation efforts; the structural non-oil deficit in the revised budget results in a mildly expansionary fiscal stance, contributing to higher aggregate demand.", "Spending on energy subsidies is projected to decline this year due to lower electricity prices; potential savings could be realized by narrowing coverage and calibrating support to help only vulnerable households.", "Over the medium term, aging-related spending pressures require additional measures to make room for new investment and promote climate initiatives.", "Proposals by the Expert Committee on Tax Reform could help make the tax system simpler and more efficient.", "Suggestions by the Pension Commission to link retirement age limits to life expectancy would benefit sustainability and labor force participation, but changes should be preceded by a comprehensive reform of Norway’s disability benefits.", "Further monetary policy tightening is needed as inflation risks are to the upside.", "Rationale:", "Objective: Contain demand and durably bring down inflation to the 2 percent target to contribute to high and stable output and employment.", "Communication: Continue to clearly communicate how economic developments affect the current and future policy stance given uncertainties about policy transmission.", "The banking system is strong but tightening global conditions pose risks.", "Risks to financial stability appear broadly manageable, but continued vigilance is needed given heightened uncertainty.", "Macroprudential recommendations:", "Cyber risk: Strengthen resilience to cyber-attacks; Norges Bank together with the FSA rolled out the TIBER (Threat Intelligence-Based Ethical Red-teaming) framework.", "AML/CFT: Improvements are ongoing; implement recommendations from a recently concluded IMF assessment of regional cross-border threats and vulnerabilities to further enhance supervision.", "Progress on structural reforms has been piecemeal.", "Measures taken:", "Disability benefits:", "Housing affordability has become more prominent under high inflation and rising interest rates.", "Norway continues important efforts in climate mitigation and adaptation.", "Initiatives:", "Further efforts are needed to fulfil Norway’s 2030 ambition under the Paris Agreement.", "Population (2022): 5.4 million", "Quota (3754.7 mil. SDR/0.78 percent of total)", "Per capita GDP (2022): US$ 106,328.4", "Literacy: 100 percent", "Main products and exports: Oil, natural gas, fish (primarily salmon)", "Real Economy (Real GDP change in percent)1/:", "Real mainland GDP (change in percent):", "Final Domestic demand:", "Private consumption:", "Public consumption:", "Gross fixed capital formation:", "Exports:", "Imports:", "Unemployment rate (percent of labor force):", "Output gap (mainland economy, - implies output below potential):", "CPI (average):", "Structural non-oil balance (percent of mainland trend GDP)2/:", "Fiscal impulse:", "In percent of Pension Fund Global Capital3/:", "Gross Public Debt (percent of GDP):", "Money and credit (end of period, 12-month percent change):", "Interest Rates (year average, in percent):", "Balance of Payments (Percent of total GDP):", "Terms of trade (change in percent):", "International reserves (end of period, in billions of US dollars):", "Gross national saving:", "Gross domestic investment:", "Exchange Rates (end of period):", "Memo: Nominal GDP (in Billions of US Dollars):", "1/ Based on market prices which include \"taxes on products, including VAT, less subsidies on products.\"", "2/ Authorities' key fiscal policy variable; excludes oil-related revenue and expenditure, GPFG income, as well as cyclical effects. Non-oil GDP trend estimated by staff.", "3/ Over-the-cycle deficit target: 3 percent of Government Pension Fund Global.", "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)", "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)", "[Norway and the IMF](http://www.imf.org/external/country/NOR/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2023/07/25/pr23274-norway-imf-exec-board-concludes-2023-arti-iv-consult/index.md", "json": "/en/news/articles/2023/07/25/pr23274-norway-imf-exec-board-concludes-2023-arti-iv-consult/index.json", "bundleManifest": "/en/news/articles/2023/07/25/pr23274-norway-imf-exec-board-concludes-2023-arti-iv-consult/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T02:16:55.883Z" }