Two centuries of Viking raids into Europe tapered off following the adoption of Christianity by King Olav TRYGGVASON in 994; conversion of the Norwegian kingdom occurred over the next several decades. In 1397, Norway was absorbed into a union with Denmark that lasted more than four centuries. In 1814, Norwegians resisted the cession of their country to Sweden and adopted a new constitution. Sweden then invaded Norway but agreed to let Norway keep its constitution in return for accepting the union under a Swedish king. Rising nationalism throughout the 19th century led to a 1905 referendum granting Norway independence. Although Norway remained neutral in World War I, it suffered heavy losses to its shipping. Norway proclaimed its neutrality at the outset of World War II, but was nonetheless occupied for five years by Nazi Germany (1940-45). In 1949, Norway abandoned neutrality and became a member of NATO. Discovery of oil and gas in adjacent waters in the late 1960s boosted Norway's economic fortunes. In referenda held in 1972 and 1994, Norway rejected joining the EU. Key domestic issues include immigration and integration of ethnic minorities, maintaining the country's extensive social safety net with an aging population, and preserving economic competitiveness.
Northern Europe, bordering the North Sea and the North Atlantic Ocean, west of Sweden
petroleum, natural gas, iron ore, copper, lead, zinc, titanium, pyrites, nickel, fish, timber, hydropower
Population - distribution
most Norwegians live in the south where the climate is milder and there is better connectivity to mainland Europe; population clusters are found all along the North Sea coast in the southwest, and Skaggerak in the southeast; the interior areas of the north remain sparsely populated
Bokmal Norwegian (official), Nynorsk Norwegian (official), small Sami- and Finnish-speaking minorities
OSLO (capital) 986,000 (2015)
- Conventional long form
- Kingdom of Norway
- Conventional short form
- Local long form
- Kongeriket Norge
- Local short form
parliamentary constitutional monarchy
- Geographic coordinates
- 59 55 N, 10 45 E
- Time difference
- UTC+1 (6 hours ahead of Washington, DC, during Standard Time)
- Daylight saving time
- +1hr, begins last Sunday in March; ends last Sunday in October
accepts compulsory ICJ jurisdiction with reservations; accepts ICCt jurisdiction
Norway has a stable economy with a vibrant private sector, a large state sector, and an extensive social safety net. Norway opted out of the EU during a referendum in November 1994; nonetheless, as a member of the European Economic Area, it contributes sizably to the EU budget.
- Total tax rate (% of commercial profits)
- Real Interest Rate
- Manufacturing, value added (% of GDP)
- Current Account Balance
- US$ 18,068,579,735
- Labor Force, Total
- Employment in Agriculture
- Employment in Industry
- Employment in Services
- Unemployment Rate
- Imports of goods and services
- US$ 120,605,833,333
- Exports of goods and services
- US$ 125,199,166,667
- Total Merchandise Trade
- FDI, net inflows
- US$ -15,179,180,743
- Commercial Service Exports
- US$ 36,364,185,888
barley, wheat, potatoes; pork, beef, veal, milk; fish
petroleum and gas, shipping, fishing, aquaculture, food processing, shipbuilding, pulp and paper products, metals, chemicals, timber, mining, textiles
- petroleum and petroleum products, machinery and equipment, metals, chemicals, ships, fish
- UK 22.2%, Germany 17.9%, Netherlands 10.2%, France 6.6%, Sweden 6.1%, Belgium 5%, US 4.5% (2015)
- machinery and equipment, chemicals, metals, foodstuffs
- Sweden 12%, Germany 11.8%, China 10.9%, UK 6.7%, US 6.6%, Denmark 6% (2015)
- Country Risk Rating
- The political and economic situation is very good. A quality business environment has a positive influence on corporate payment behavior. Corporate default probability is very low on average.
- Business Climate Rating
- The business environment is very good. Corporate financial information is available and reliable. Debt collection is efficient. Institutional quality is very good. Intercompany transactions run smoothly in environments rated A1.
- Current account and public finances sustained by energy market despite fall in world prices
- Discovery of new oil fields
- Norwegian currency's safe haven status for investors
- Broad political consensus
- Solid banking system
- Tensions on the job market eased by immigration
- Budget in deficit without oil and gas
- Very high level of household debt
- Competitiveness eroded by high salaries
- Labor shortage in high value-added sectors
Low oil prices led to a slowdown in activity in 2016, because of a reduction in oil investments and weaker private consumption. In 2017, growth is expected to be a little firmer, driven by private consumption and investment in non-oil sectors. However, the weak oil prices will still depress the oil and gas sector, which accounts for 20% of GDP, 30% of investments and 60% of total exports. Household consumption is, therefore, expected to support Norwegian growth, thanks to historically low interest rates (0.5%) set by the central bank, as well as rising property prices boosted by easy access to credit. The government's expansionary fiscal policy will also help to encourage public investment and household consumption (despite high rates of debt: 220% of gross disposable income). Moreover, unemployment will stabilize (4.5%), with a halt to oil sector companies' plans to lay off workers. The recovery of investment in the other sectors will also support the economy, especially in shipbuilding and construction. Past depreciation of the Norwegian krone (15% since 2014) benefited the tourism sector and improved the competitiveness of Norwegian exports, while, however, creating inflation (making imported goods more expensive). Inflation should, however, fall back below the central bank target (2.5%), with the stabilization of the krone. The two greatest risks are further falls in oil and house prices, which will adversely affect household consumption.
Norway could, therefore, dig into the financial reserves of its sovereign fund, the biggest in the world in asset terms (about EUR 800 billion, or 2.2 times GDP) in order to maintain the level of economic activity.
The current account surplus will decline slightly in 2017 due to a contraction in the trade balance surplus. The drop in oil exports could be partially offset by higher exports in other sectors, which are expected to benefit from the depreciation of the Norwegian krone. Nonetheless, strong domestic demand will sustain imports, which will grow more strongly than exports. Imports from emerging countries (notably China) will represent an increasingly important share of Norway's trade transactions, although European countries will continue to be its main trading partners. Weak Euro zone demand combined with the consequences of Brexit could be risk factors for exports, 23% of which are sent to the United Kingdom.
In its 2017 budget, similar to that of 2016, the government presented a series of measures aimed at stimulating activity and reducing the economy's dependence on natural resources. The main elements include a cut in corporation tax (from 27% to 22% by 2018) and income tax so as to increase the attractiveness of non-oil investment and support private consumption. This budget also includes finance for infrastructure projects and specific measures to stimulate employment and competitiveness, especially in the regions most affected by the weak oil prices. Despite a policy of higher spending and lower income, the budget surplus should still be considerable and at a very comfortable level relative to other OECD countries. Moreover, external shocks could be contained thanks to revenues from the Norwegian sovereign fund, 4% of which can be drawn on the budget. The public debt is also expected to edge up, while remaining very sustainable given the reserves the country has available.
The center-right government coalition, led by Erna Solberg, is expected to stay in place at least until the September 2017 parliamentary elections. However, disagreements are appearing within this coalition, exacerbated against a backdrop of sluggish growth. The Progress Party (FrP) is, for example, likely to advocate a less permissive immigration policy. Prime Minister Erna Soldberg is relying on a policy of fiscal stimulus to reinvigorate the economy ahead of the September 2017 parliamentary elections.
Norway has risen two places in the World Bank's 2017 Doing Business rankings, so it is now sixth, the institution considers that the conditions for the performance of contracts have improved.