In its annual asessment, the International Monetary Fund concludes that the Government's economic program is well adapted to the subdued growth in the Norwegian economy. (Photo: Finance Minister Siv Jensen)
IMF predicts a GDP growth for mainland Norway of 1.4 per cent this year and slightly higher next year, broadly in line with projections in the Government’s Revised National Budget for 2015. Unemployment is projected to increase slightly, but remain at a relatively low level.
“I note that the IMF-delegation supports the economic program that my Government recently presented it in the Revised National Budget. IMF confirms our analysis of the challenges facing the Norwegian economy and that we are facing a transition to a new normal,” says finance minister Siv Jensen.
IMF points out that the oil sector will no longer be an equally powerful source of economic growth, and that other competitive industries will have to become more important. The delegation stressed that public demand for goods and services should not replace the fall in demand from the petroleum sector
The condition in the Norwegian financial system is given special attention in this years’ report, due to the IMF conducting its five-yearly regular comprehensive review of the Norwegian financial system (Financial Stability Assessment Program (FSAP)). The Norwegian financial system is considered to be generally sound and well managed. The report notes that high growth in house prices and household debt are risks to financial stability, and points out that revised regulations for new construction can help increase housing supply. Also banks' reliance on wholesale funding is a source of instability.
The report points out that a more neutral tax system could increase productivity. IMF also points out that there is a need for further reforms to the pension system and sickness and disability benefits and that current agricultural policies inhibit productivity growth in the wider economy and helps to keep the cost of living up there.
The IMF delegation was headed by Thomas Dorsey, Mission Chief for Denmark, Norway and the Netherlands.