Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for Norway[1] and endorsed the staff appraisal without a meeting on a lapse-of-time basis[2] The authorities have consented to the publication of the Staff Report prepared for this consultation.[3]
Norway’s economy has demonstrated resilience despite tight financial conditions and a challenging global backdrop. In 2024, overall GDP grew by 2.1 percent, driven by record-high natural gas extraction, while mainland GDP rose by 0.6 percent, supported by increased public spending. Employment and hours worked increased, although the unemployment rate edged up to 4 percent. Looking ahead, mainland GDP is projected to grow by 1.5 percent in 2025, buoyed by easing financial conditions, expansionary fiscal policy, and recovering real incomes. Inflation has steadily declined but remains above the 2 percent target, with services inflation and wage growth contributing to persistent price pressures. Norges Bank began normalizing monetary policy in June 2025, lowering the policy rate 25 bp to 4.25 percent and signaling further cuts ahead. The government’s fiscal stance has become increasingly expansionary, with the 2025 budget delivering a significant fiscal impulse. The structural non-oil deficit is projected to reach about 13 percent of trend mainland GDP, while withdrawals from the Government Pension Fund Global remain below the 3 percent guideline. The government has also committed to gradually increasing defense spending toward 5 percent of GDP in line with NATO targets. While inflation risks are broadly balanced, downside risks to growth persist, including global trade tensions, elevated household debt, and long-term demographic and structural challenges.
Executive Board Assessment[4]
In concluding the 2025 Article IV Consultation with Norway, Executive Directors endorsed staff’s appraisal, as follows:
Norway’s economy is resilient owing to strong fundamentals that place it well to navigate a highly uncertain external environment. Fiscal support and a gradual recovery of private domestic demand are expected to drive mainland real GDP growth to 1.5 percent in 2025—around its long-term potential—and keep it at that level over the medium term. Under the baseline, headline and core inflation are expected to decline to 2.2 and 2.6 percent by end-2025, returning to target by 2027. While the balance of risks to growth is tilted to the downside, risks to inflation are more balanced. Norway's strong macroeconomic fundamentals and institutional strengths position it well to cope with the challenging external backdrop derived from higher trade policy uncertainty and geoeconomic fragmentation.
Bringing inflation sustainably back to target remains the most pressing near-term policy priority. Norges Bank should proceed cautiously with monetary policy normalization. The current restrictive stance should remain in place until inflation is clearly on track to return to the 2 percent target. Norway’s strong monetary policy framework has served the economy well but steering through rapidly evolving global developments and volatile data may require enhancements to the monetary policy process, including expanding the use of scenario analysis, formalizing a role for contrarian views in the forecasting process, and refining communication strategies to maintain well-anchored expectations, including criteria for strategic communications when market expectations deviate markedly from policy intentions.
Macroprudential policy settings should not be eased further. Macroprudential easing should wait until systemic risks recede or financial disintermediation risks emerge. Although household debt burdens have stabilized, they remain high and the recent relaxation of the LTV limit for mortgages could increase financial vulnerabilities further by fueling increases in house prices and household indebtedness. Lasting improvements in housing affordability will require structural measures to address factors that keep prices elevated. The current CCyB setting remains appropriate, but Norges Bank should be prepared to raise it, if cyclical vulnerabilities increase.
The financial system is sound with strong buffers, but vulnerabilities remain elevated. Continued close monitoring of the financial system is essential. Priority should be given to preserving capital buffers, including by ensuring that bank models properly reflect credit risks, and to strengthening contingency planning amid continued pressure on the commercial real estate (CRE) sector. Measures to address increased bank reliance on covered bonds are welcome and would help mitigate interconnectedness risks. Participation in the initiative to undertake a Nordic-Baltic regional stress test exercise would enhance the assessment of cross-border financial interlinkages and risks. Work to address the findings of the 2024 Nordic-Baltic crisis management exercise and the 2020 FSAP recommendations should continue.
A broadly neutral fiscal stance would support the disinflation process and improve policy coherence. The current expansionary fiscal stance is expected to provide significant support to economic activity, posing challenges to the disinflation effort. A neutral fiscal position would enhance the effectiveness of the overall policy mix, which may require offsetting new spending priorities with savings elsewhere to avoid fueling inflationary pressures.
Enhancements to Norway’s robust fiscal framework would help ensure continued delivery of strong economic and social outcomes. Reinforcing the countercyclicality of fiscal policy and spending discipline would enhance fiscal resilience. Complementing the fiscal rule with explicit medium-term expenditure limits could reduce exposure to volatility from market-driven changes in the large and growing value of the GPFG and improve fiscal planning. Strengthening multi-year budgeting, improving public investment management, conducting more systematic spending reviews, and setting efficiency targets would support more strategic resource allocation and enhance public service delivery. Benchmarking the setup of the Advisory Panel on Fiscal Policy Analysis against best international practices for independent fiscal councils and expanding its mandate would help further enhance the fiscal framework.
Advancing fiscal reforms is essential to bolster resilience and support long-term growth. Tax reforms aimed at improving efficiency and broadening the revenue base remain a priority. Consolidating multiple VAT rates and enhancing incentives for work and investment would improve resilience of the tax system. Further measures to reform disability and sickness benefits, along the lines of past IMF recommendations, are needed to reduce work disincentives, increase labor force participation, and contain long-term fiscal costs. Sustained reform efforts are crucial to ensure long-term sustainability of fiscal policy in the face of rising structural spending pressures.
A broad and ambitious reform agenda is essential to accelerate productivity growth and mitigate the effects of geoeconomic fragmentation. Advancing the “reinforced work line” agenda would reduce reliance on disability benefits, raise labor force participation among underrepresented groups—including youth and immigrants—and increase total hours worked. Strengthening education-to-work transitions, promoting full-time employment, and accelerating digitalization would further support productivity. Further measures will be needed to achieve Norway’s 2035 emission reduction targets.
It is proposed that the next Article IV consultation with Norway take place on the standard 12-month cycle.
[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
[2] The Executive Board takes decisions under its lapse-of-time procedure when the Board agrees that a proposal can be considered without convening formal discussions.
[3] Under the IMF's Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires the member consent. The staff report will be shortly published on the www.imf.org/Norway page.
[4] At the conclusion of the discussion, the Managing Director, as Chair of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm. [The Executive Board takes decisions under its lapse-of-time procedure when the Board agrees that a proposal can be considered without convening formal discussions.]
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Table 1. Norway: Selected Economic and Social Indicators, 2023-2030
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Population (2024): 5.6 million
Per capita GDP (2024): US$ 86,611
Main products and exports: Oil, natural gas, fish (primarily salmon)
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Projections4/
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2023
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2024
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2025
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2026
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2027
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2028
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2029
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2030
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Real economy
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Real GDP (change in percent)1/
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0.1
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2.1
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0.7
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-1.7
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1.6
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1.3
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1.3
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1.3
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Real mainland GDP (change in percent)
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0.7
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0.6
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1.5
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1.4
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1.6
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1.5
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1.5
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1.5
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Final Domestic demand
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-0.3
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0.3
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1.7
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1.7
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1.7
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1.7
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1.7
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1.7
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Private consumption
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-1.2
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1.4
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2.3
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1.8
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1.9
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2.0
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2.0
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2.0
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Public consumption
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3.4
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2.4
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2.1
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1.8
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1.6
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2.0
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2.0
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2.0
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Gross fixed capital formation
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-2.6
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-4.6
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-0.3
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1.4
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1.2
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1.2
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1.2
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1.4
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Exports
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4.8
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2.7
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1.9
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1.8
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2.7
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2.6
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2.6
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2.6
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Imports
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-1.6
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4.3
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2.0
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2.2
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2.3
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2.6
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2.7
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2.7
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Unemployment rate (percent of labor force)
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3.6
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4.0
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4.1
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4.2
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4.1
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4.0
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3.9
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3.8
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Output gap (mainland economy-implies output below potential)
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0.9
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-0.1
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-0.1
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-0.2
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0.0
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0.0
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0.0
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0.0
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CPI (average)
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5.5
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3.1
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2.4
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2.4
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2.0
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2.0
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2.0
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2.0
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Core Inflation (average)
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6.2
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3.7
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3.0
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2.6
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2.0
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2.0
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2.0
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2.0
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Public finance
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Central government (fiscal account basis)
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Non-oil balance (percent of mainland GDP)
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-7.5
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-8.2
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-8.7
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-9.1
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-9.3
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-9.5
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-9.8
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-10.0
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Structural non-oil balance (percent of mainland GDP)2/
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-9.4
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-10.3
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-12.9
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-12.8
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-12.8
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-12.8
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-12.8
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-12.9
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Fiscal impulse
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0.4
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0.9
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2.5
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-0.1
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0.0
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0.0
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0.0
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0.0
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in percent of Pension Fund Global Capital3/
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-2.9
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-2.6
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-2.7
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-2.7
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-2.7
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-2.7
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-2.6
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-2.6
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General government (national accounts definition, percent of mainland GDP)
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Overall balance
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21.8
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17.0
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16.3
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13.5
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12.8
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12.3
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11.7
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10.9
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Non-oil balance (percent of mainland GDP)
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-8.4
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-10.1
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-10.7
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-11.0
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-11.2
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-11.4
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-11.6
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-11.8
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Net financial assets
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479
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557
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568
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572
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574
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575
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576
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575
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of which: capital of Government Pension Fund Global (GPFG)
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406
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487
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501
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507
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511
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515
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517
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519
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Gross Public Debt (percent of GDP)
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44.2
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42.7
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42.5
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41.1
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39.8
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38.4
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37.0
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35.5
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Money and credit (end of period, 12-month percent change)
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Broad money, M2
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0.3
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3.4
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…
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…
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…
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…
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…
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…
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Domestic credit, C2
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3.8
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3.3
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3.9
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3.8
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3.6
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3.5
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3.5
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3.5
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Interest rates (year average, in percent)
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Three-month interbank rate
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4.2
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4.7
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4.0
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3.5
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3.2
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3.2
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3.2
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3.2
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Ten-year government bond yield
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3.4
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3.6
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3.9
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3.6
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3.4
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3.4
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3.4
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3.4
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Balance of payments (percent of mainland GDP)
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Current account balance
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17.4
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16.7
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14.8
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14.1
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13.5
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12.8
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12.1
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11.5
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Balance of goods and services (percent of mainland GDP)
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20.3
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17.5
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16.1
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15.7
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15.2
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14.7
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14.2
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13.7
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Exports of goods and services (volume change in percent)
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0.4
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5.2
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0.4
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5.3
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1.6
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1.3
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2.1
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2.6
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Imports of goods and services (volume change in percent)
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-1.5
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4.3
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1.4
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1.6
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2.2
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2.7
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2.8
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2.7
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Terms of trade (change in percent)
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-29.3
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-6.1
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0.3
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-4.9
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-0.1
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0.4
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0.0
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-0.4
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International reserves (end of period, in billions of US dollars)
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77.4
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82.4
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82.4
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82.4
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82.4
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82.4
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82.4
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82.4
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Gross national saving
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41.6
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40.8
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38.8
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38.3
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37.8
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37.1
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36.3
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35.6
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Gross domestic investment
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24.3
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24.1
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24.0
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24.2
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24.3
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24.2
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24.2
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24.1
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Exchange rates (end of period)
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Bilateral rate (NOK/USD), end-of-period
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10.6
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10.7
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…
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…
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…
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…
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…
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…
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Nominal effective rate (2010=100)
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73.2
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72.6
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…
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…
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…
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…
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…
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…
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Real effective rate (2010=100)
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74.1
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73.6
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…
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…
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…
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…
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…
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…
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Memo:
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Nominal GDP (in Billions of US Dollars)
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482.9
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83.6
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515.5
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546.9
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566.2
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584.2
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603.1
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623.3
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Sources: Norwegian Authorities; International Financial Statistics; and IMF staff calculations.
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 MOF.
3/ Over-the-cycle deficit target: 3 percent of Government Pension Fund Global.
4/ Based on information available as of July 1, 2025.
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