{
  "title": "IMF Executive Board Concludes 2024 Article IV Consultation with Norway",
  "publication": "IMF News, September 18, 2024",
  "sourceUrl": "https://www.imf.org/en/news/articles/2024/09/17/pr-24333-norway-imf-executive-board-concludes-2024-article-iv-consultation",
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  "summary": "The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Norway",
  "publishDate": "2024-09-18",
  "sections": [
    {
      "heading": "Economic outlook and inflation",
      "content": "- Real GDP growth slowed to 0.5 percent in 2023 from a cyclical peak of 3.5 percent on average over 2021–22.\n- Economic activity is projected to rebound in 2024, with real GDP growth rising to 1.5 percent.\n- Real mainland GDP is projected to rise by 0.8 percent in 2024 amid still tight financial conditions.\n- Inflation: headline inflation is high and above the 2 percent target. Inflation is projected to reach 3.3 percent by end-2024 and return to the target by mid-2026.\n- Core inflation remains elevated driven by persistent services inflation; a weaker currency has contributed to keeping inflation high, while inflation expectations remain above the inflation target.\n- Risk assessment: Amidst still high uncertainty, risks to the growth and inflation outlook are balanced."
    },
    {
      "heading": "Monetary policy, financial conditions, and financial stability",
      "content": "- Norges Bank implemented a cumulative 450 bps increase in its policy rate, resulting in a restrictive monetary policy stance; financial conditions remain tight though easing since early 2024.\n- Tighter financial conditions have weighed on private consumption and gross fixed investment, particularly residential investment; exports and public spending provided some support in 2023.\n- Commercial real estate (CRE) sector has been impacted by rising debt-servicing costs and declining valuations.\n- Macroprudential policy settings have been tightened across several dimensions over the past two years; systemic risks are not building up further.\n- The financial system is sound and bank buffers are robust, but vulnerabilities remain high.\n- Directors recommended maintaining a tight monetary policy stance to ensure inflation convergence and mitigate risks of de-anchoring of inflation expectations; they encouraged a data-dependent approach and readiness to adjust the stance as needed.\n- Directors welcomed that macroprudential policy settings should remain tight and recommended continued close monitoring; they noted elevated household indebtedness and high exposure to CRE as vulnerabilities.\n- Directors encouraged further progress on the implementation of 2020 FSAP recommendations and welcomed strengthening of the Financial Stability Authority (Finanstilsynet)."
    },
    {
      "heading": "Fiscal policy assessment and recommendations",
      "content": "- The fiscal policy stance is expansionary.\n- Directors recommended adopting a neutral fiscal stance, highlighting that removing the current fiscal stimulus would support disinflation.\n- Discretionary fiscal stimulus should be well-targeted and temporary and deployed only if needed.\n- Directors encouraged efforts to address increased reliance on natural resource revenues and to adopt measures to ensure higher defense and ageing-related spending needs can be accommodated.\n- Recommended measures include increasing the efficiency of the tax system, restructuring the pension and social protection regimes, and complementing the fiscal policy framework with enhanced medium-term budgeting and an expenditure rule.\n- Directors noted the importance of addressing the structural non-oil balance and related fiscal metrics."
    },
    {
      "heading": "Structural reforms and medium-term challenges",
      "content": "- Directors underscored the importance of comprehensive structural reforms to address population ageing, productivity slowdown, and geoeconomic fragmentation.\n- Reforms to foster diversification, raise productivity growth, and mitigate the impact of geoeconomic fragmentation were emphasized.\n- Directors emphasized that reforming the sickness and disability benefits systems would help bolster labor supply.\n- Directors welcomed the authorities’ commitment to enhancing climate mitigation and adaptation."
    },
    {
      "heading": "Executive Board Assessment (summary)",
      "content": "- Directors agreed with the thrust of the staff appraisal and welcomed the expected rebound in growth.\n- They highlighted the need to carefully navigate policy trade-offs arising from elevated inflation and financial sector vulnerabilities.\n- They recommended maintaining tight monetary and macroprudential policies, adopting a neutral fiscal stance, and pursuing comprehensive structural reforms."
    },
    {
      "heading": "Selected economic and social indicators (2021–2029) — key figures and projections",
      "content": "- Real GDP (change in percent): 2021: 3.9; 2022: 3.0; 2023: 0.5; 2024: 1.5; 2025: 1.8; 2026: 1.7; 2027: 1.6; 2028: 1.4; 2029: (not listed)\n- Real mainland GDP (change in percent): 2021: 4.5; 2022: 3.7; 2023: 0.7; 2024: 0.8\n- Final Domestic demand (change in percent): 2021: 5.1; 2022: 0.3; 2023: 0.4\n- Private consumption (change in percent): 2021: 6.2; 2022: -0.8; 2023: 1.2\n- Public consumption (change in percent): 2021: 3.6; 2022: 1.1; 2023: 3.4; 2024: 2.0\n- Gross fixed capital formation (change in percent): 2021: 7.6; 2022: -1.2; 2023: -2.2; 2024: 1.3\n- Exports (change in percent): 2021: 7.3; 2022: 9.3; 2023: 4.6; 2024: 2.5; 2025: 2.4\n- Imports (change in percent): 2021: 2.8; 2022: 14.7; 2023: 0.6; 2024: 2.1; 2025: 2.3\n- Real Offshore GDP (change in percent): 2021: -0.3; 2022: -0.1; 2023: 4.2; 2024: 2.9; 2025: 2.2; 2026: 1.0\n- Unemployment rate (percent of labor force): 2021: 4.4; 2022: 3.3; 2023: 3.8\n- Output gap (mainland economy-implies output below potential): 2021: -0.7; 2022: -0.2; 2023: 0.0; 2024: 0.1\n- CPI (average): 2021: 3.5; 2022: 5.8; 2023: 5.5\n- Non-oil balance (percent of mainland GDP): 2021: -11.1; 2022: -7.8; 2023: -7.5; 2024: -8.4; 2025: -8.7; 2026: -9.0; 2027: -9.2; 2028: -9.4; 2029: -9.6\n- Structural non-oil balance (percent of mainland trend GDP): 2021: -10.1; 2022: -9.7; 2023: -10.4; 2024: -11.7; 2025: -12.0; 2026: -12.2; 2027: -12.3\n- Fiscal impulse: 2021: -1.0; 2022: -0.9; 2023: 0.2\n- In percent of Pension Fund Global Capital: 2021: -3.2; 2022: -2.7; 2023: -3.0; 2024: -2.6\n- Gross Public Debt (percent of GDP): 2021: 41.6; 2022: 36.3; 2023: 44.0; 2024: 42.7; 2025: 42.3; 2026: 40.9\n- Broad money, M2 (end of period, 12-month percent change): 2021: 10.4; 2022: 5.6; 2023: …\n- Domestic credit, C2 (end of period, 12-month percent change): 2021: 4.9\n- Three-month interbank rate (year average, in percent): 2021: 4.8; 2022: 4.0\n- Ten-year government bond yield (year average, in percent): 2021: 3.2; 2022: 2.6\n- Current account balance (percent of total GDP): 2021: 14.9; 2022: 30.2; 2023: 17.9; 2024: 14.5; 2025: 12.5; 2026: 10.6; 2027: 8.8; 2028: 6.6\n- Balance of goods and services (percent of mainland GDP): 2021: 19.4; 2022: 44.3; 2023: 19.6; 2024: 20.6; 2025: 17.6; 2026: 12.6; 2027: 11.0; 2028: 9.6\n- Terms of trade (change in percent): 2021: 50.8; 2022: 44.1; 2023: -29.4; 2024: 8.6; 2025: 4.3; 2026: -0.6; 2027: -1.4; 2028: -1.6\n- International reserves (end of period, in billions of US dollars): 2021: 83.0; 2022: 72.1; 2023: 77.4\n- Gross national saving: 2021: 40.0; 2022: 51.9; 2023: 43.8; 2024: 39.8; 2025: 38.5; 2026: 37.1; 2027: 35.7; 2028: 34.8; 2029: 33.9\n- Gross domestic investment: 2021: 25.1; 2022: 21.7; 2023: 25.9; 2024: 25.3; 2025: 26.0; 2026: 26.6; 2027: 26.9; 2028: 27.2; 2029: 27.3\n- Nominal GDP (in Billions of US Dollars): 2021: 503.4; 2022: 593.7; 2023: 485.3; 2024: 504.3; 2025: 507.6; 2026: 509.4; 2027: 521.3; 2028: 534.9; 2029: 549.5\n- Nominal effective rate (2010=100): 2021: 80.5; 2022: 79.9; 2023: 73.2\n- Real effective rate (2010=100): 2021: 83.1; 2022: 80.9; 2023: 74.1\n\nIMF Executive Board press release: IMF Executive Board Concludes 2024 Article IV Consultation with Norway (Press Release No. 24/333).\n\n---\n\n\n References\n\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/2024/09/17/pr-24333-norway-imf-executive-board-concludes-2024-article-iv-consultation"
    }
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    "Published: September 18, 2024",
    "Real GDP growth slowed to 0.5 percent in 2023 from a cyclical peak of 3.5 percent on average over 2021–22.",
    "Economic activity is projected to rebound in 2024, with real GDP growth rising to 1.5 percent.",
    "Real mainland GDP is projected to rise by 0.8 percent in 2024 amid still tight financial conditions.",
    "Inflation: headline inflation is high and above the 2 percent target. Inflation is projected to reach 3.3 percent by end-2024 and return to the target by mid-2026.",
    "Core inflation remains elevated driven by persistent services inflation; a weaker currency has contributed to keeping inflation high, while inflation expectations remain above the inflation target.",
    "Risk assessment: Amidst still high uncertainty, risks to the growth and inflation outlook are balanced.",
    "Norges Bank implemented a cumulative 450 bps increase in its policy rate, resulting in a restrictive monetary policy stance; financial conditions remain tight though easing since early 2024.",
    "Tighter financial conditions have weighed on private consumption and gross fixed investment, particularly residential investment; exports and public spending provided some support in 2023.",
    "Commercial real estate (CRE) sector has been impacted by rising debt-servicing costs and declining valuations.",
    "Macroprudential policy settings have been tightened across several dimensions over the past two years; systemic risks are not building up further.",
    "The financial system is sound and bank buffers are robust, but vulnerabilities remain high.",
    "Directors recommended maintaining a tight monetary policy stance to ensure inflation convergence and mitigate risks of de-anchoring of inflation expectations; they encouraged a data-dependent approach and readiness to adjust the stance as needed.",
    "Directors welcomed that macroprudential policy settings should remain tight and recommended continued close monitoring; they noted elevated household indebtedness and high exposure to CRE as vulnerabilities.",
    "Directors encouraged further progress on the implementation of 2020 FSAP recommendations and welcomed strengthening of the Financial Stability Authority (Finanstilsynet).",
    "The fiscal policy stance is expansionary.",
    "Directors recommended adopting a neutral fiscal stance, highlighting that removing the current fiscal stimulus would support disinflation.",
    "Discretionary fiscal stimulus should be well-targeted and temporary and deployed only if needed.",
    "Directors encouraged efforts to address increased reliance on natural resource revenues and to adopt measures to ensure higher defense and ageing-related spending needs can be accommodated.",
    "Recommended measures include increasing the efficiency of the tax system, restructuring the pension and social protection regimes, and complementing the fiscal policy framework with enhanced medium-term budgeting and an expenditure rule.",
    "Directors noted the importance of addressing the structural non-oil balance and related fiscal metrics.",
    "Directors underscored the importance of comprehensive structural reforms to address population ageing, productivity slowdown, and geoeconomic fragmentation.",
    "Reforms to foster diversification, raise productivity growth, and mitigate the impact of geoeconomic fragmentation were emphasized.",
    "Directors emphasized that reforming the sickness and disability benefits systems would help bolster labor supply.",
    "Directors welcomed the authorities’ commitment to enhancing climate mitigation and adaptation.",
    "Directors agreed with the thrust of the staff appraisal and welcomed the expected rebound in growth.",
    "They highlighted the need to carefully navigate policy trade-offs arising from elevated inflation and financial sector vulnerabilities.",
    "They recommended maintaining tight monetary and macroprudential policies, adopting a neutral fiscal stance, and pursuing comprehensive structural reforms.",
    "Real GDP (change in percent): 2021: 3.9; 2022: 3.0; 2023: 0.5; 2024: 1.5; 2025: 1.8; 2026: 1.7; 2027: 1.6; 2028: 1.4; 2029: (not listed)",
    "Real mainland GDP (change in percent): 2021: 4.5; 2022: 3.7; 2023: 0.7; 2024: 0.8",
    "Final Domestic demand (change in percent): 2021: 5.1; 2022: 0.3; 2023: 0.4",
    "Private consumption (change in percent): 2021: 6.2; 2022: -0.8; 2023: 1.2",
    "Public consumption (change in percent): 2021: 3.6; 2022: 1.1; 2023: 3.4; 2024: 2.0",
    "Gross fixed capital formation (change in percent): 2021: 7.6; 2022: -1.2; 2023: -2.2; 2024: 1.3",
    "Exports (change in percent): 2021: 7.3; 2022: 9.3; 2023: 4.6; 2024: 2.5; 2025: 2.4",
    "Imports (change in percent): 2021: 2.8; 2022: 14.7; 2023: 0.6; 2024: 2.1; 2025: 2.3",
    "Real Offshore GDP (change in percent): 2021: -0.3; 2022: -0.1; 2023: 4.2; 2024: 2.9; 2025: 2.2; 2026: 1.0",
    "Unemployment rate (percent of labor force): 2021: 4.4; 2022: 3.3; 2023: 3.8",
    "Output gap (mainland economy-implies output below potential): 2021: -0.7; 2022: -0.2; 2023: 0.0; 2024: 0.1",
    "CPI (average): 2021: 3.5; 2022: 5.8; 2023: 5.5",
    "Non-oil balance (percent of mainland GDP): 2021: -11.1; 2022: -7.8; 2023: -7.5; 2024: -8.4; 2025: -8.7; 2026: -9.0; 2027: -9.2; 2028: -9.4; 2029: -9.6",
    "Structural non-oil balance (percent of mainland trend GDP): 2021: -10.1; 2022: -9.7; 2023: -10.4; 2024: -11.7; 2025: -12.0; 2026: -12.2; 2027: -12.3",
    "Fiscal impulse: 2021: -1.0; 2022: -0.9; 2023: 0.2",
    "In percent of Pension Fund Global Capital: 2021: -3.2; 2022: -2.7; 2023: -3.0; 2024: -2.6",
    "Gross Public Debt (percent of GDP): 2021: 41.6; 2022: 36.3; 2023: 44.0; 2024: 42.7; 2025: 42.3; 2026: 40.9",
    "Broad money, M2 (end of period, 12-month percent change): 2021: 10.4; 2022: 5.6; 2023: …",
    "Domestic credit, C2 (end of period, 12-month percent change): 2021: 4.9",
    "Three-month interbank rate (year average, in percent): 2021: 4.8; 2022: 4.0",
    "Ten-year government bond yield (year average, in percent): 2021: 3.2; 2022: 2.6",
    "Current account balance (percent of total GDP): 2021: 14.9; 2022: 30.2; 2023: 17.9; 2024: 14.5; 2025: 12.5; 2026: 10.6; 2027: 8.8; 2028: 6.6",
    "Balance of goods and services (percent of mainland GDP): 2021: 19.4; 2022: 44.3; 2023: 19.6; 2024: 20.6; 2025: 17.6; 2026: 12.6; 2027: 11.0; 2028: 9.6",
    "Terms of trade (change in percent): 2021: 50.8; 2022: 44.1; 2023: -29.4; 2024: 8.6; 2025: 4.3; 2026: -0.6; 2027: -1.4; 2028: -1.6",
    "International reserves (end of period, in billions of US dollars): 2021: 83.0; 2022: 72.1; 2023: 77.4",
    "Gross national saving: 2021: 40.0; 2022: 51.9; 2023: 43.8; 2024: 39.8; 2025: 38.5; 2026: 37.1; 2027: 35.7; 2028: 34.8; 2029: 33.9",
    "Gross domestic investment: 2021: 25.1; 2022: 21.7; 2023: 25.9; 2024: 25.3; 2025: 26.0; 2026: 26.6; 2027: 26.9; 2028: 27.2; 2029: 27.3",
    "Nominal GDP (in Billions of US Dollars): 2021: 503.4; 2022: 593.7; 2023: 485.3; 2024: 504.3; 2025: 507.6; 2026: 509.4; 2027: 521.3; 2028: 534.9; 2029: 549.5",
    "Nominal effective rate (2010=100): 2021: 80.5; 2022: 79.9; 2023: 73.2",
    "Real effective rate (2010=100): 2021: 83.1; 2022: 80.9; 2023: 74.1",
    "[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)"
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