Norway: Macroeconomic Country Outlook
- GlobalData forecasts real GDP to grow by 3.5% in 2022 as all COVID-19 restrictions are lifted which will support resumption of economic activities.
- Norway ranked seventh out of 136 nations in the GCRI Q4 2021.
- According to the Norwegian Petroleum Directorate, the estimated net cash flow from the petroleum industry was NOK184 billion ($21.2 billion) in 2021, which is forecast to increase to NOK277 billion ($32 billion) in 2022.
PESTLE Summary
- Political: Strong democratic principles. According to the World Bank, World Governance Indicator (2021), Norway secured 100 percentile rank in the parameter of voice and accountability in 2020 and 98.6 percentile rank in government effectiveness. The country held a parliamentary election on September 13, 2021. According to the parliamentary election, most seats were won by the Labor Party (26.3%), followed by the Conservative Party (20.4%), Center Party (13.5%), Progress Party (11.6%) and Socialist Party (7.6%). Jonas Gahr Store became the new Prime Minister of Norway on October 14, 2021.
- Economic: Economy to recover in short-run period. According to GlobalData, the real GDP contracted by 0.8% in 2020. Strict lockdown restrictions, disrupted trade, and poor consumer confidence resulted in an overall decline in consumption expenditure in 2020. However, the real GDP growth rate of Norway expanded by 3.7% in 2021, according to GlobalData estimates. The real GDP is further forecast to rise by 3.5% in 2022 and 2.6% in 2023. The unemployment rate is forecast to decline to 4% in 2022, from 4.3% and 4.6% in 2021 and 2020, respectively, due to resumption of economic activities and easing of lockdown measures.
- Social: The Norwegian population enjoys a high standard of living, with the country performing well on most of the indicators in the OECD Better Life Index. The employment rate of people with upper secondary and tertiary education has been historically high and above the OECD average since 2005. In 2020, Norwegians with tertiary education was 45.3%, more than the OECD average of 39.02%. The labor force participation rate of Norwegian women is among the highest in the world, with more than 75% of women of working age either employed or looking for a job in 2020, according to the OECD.
- Technology: Growing ICT sector. In August 2021, Eltel Norway entered into a contract with telecommunications company Telenor to introduce 5G technology in Norway. In September 2021, Telia Norway introduced 1000 5G sites in Norway and announced to provide nationwide 5G coverage by 2023. In November 2021, Ice Group launched 5G services in the country, which is limited to parts of Oslo. The company decided to accelerate its 5G rollout with the aim of reaching 75% population coverage in coming years. According to the Network Readiness Index (2021), the country secured first rank among 130 economies for various indicators, namely Internet access in schools, online access to financial account and e-commerce legislation. Norway stood at second rank for ICT skills out of 130 countries. The robust ICT sector of the country is expected to support and encourage innovation and development in Norway.
- Legal: Seafood export of Norway in 2021. In 2021, the country hit the highest seafood trade volume and value by exporting 3.1 million metric tons (MT) of seafood products worth NOK120.8 billion ($13.7 billion), according to the Norwegian Seafood Council (NSC). In 2021, the value of export increased by 14.3%, from the previous year. In 2021, export volume of fish also increased by 11%, from 2020, through the export of 1.4 million MT of fish from aquaculture operations. The country witnessed significant uplift in demand of seafood. Due to robust production in the sector, in 2021, the country exports 1.7 million MT of seafood to the European Union worth $7.9 billion, 585,000 MT of products worth $2.7 billion were exported to Asia, 189,000 MT with a value of $623.9 million to Eastern Europe. Growth in the sector is expected to play key role for the economy.
- Environmental: Pioneer in terms of carbon-neutrality. Norway’s electricity needs are largely covered by hydropower. Transport and oil and gas extraction are the highest emitters in the country. Combined with EU emissions trading and use of the Joint Implementation and Clean Development Mechanism under the Kyoto Protocol, the government aims to make Norway carbon neutral by 2030. In October 2021, Norway and the UK started construction of a 450-mile subsea cable to connect the nations and share renewable energy. Initially, the subsea electricity interconnector will start with a maximum capacity of 700 megawatts (MW), which will increase to 1400MW over a three-month period. The North Sea Link (NSL) will provide enough clean electricity to power 1.4 million homes, at full capacity.
Key Fundamentals
Macroeconomic outlook
- According to the National Statistics Survey, Norway, oil firms expect to invest $17.9 billion in 2022. During the first few weeks of 2022, the Norwegian Petroleum Directorate (NPD) granted multiple drilling permits.
- In January 2022, the petroleum and energy ministry of Norway offered 53 production licenses in mature oil and gas producing areas.
- According to the International Monetary Fund, despite global pandemic, the current account surplus of the country increased from 2.0% of GDP in 2020 to 7.2% of GDP in 2021. The current account surplus is forecast to remain high at 7% of GDP in 2022.
- With gradual easing of restrictions and reopening of the economy, Norway has been exhibiting signs of recovery since Q2 2021. In Q1 2021, GDP contracted by 0.2% (Q-o-Q); however, the economy grew by 1% (Q-o-Q) in Q2 2021 and by 3.8% (Q-o-Q) in Q3 2021, according to the OECD.
- The unemployment rate has been exhibiting a downward trend since May 2021. It declined to 3.6% in September 2021 from a high of 5% in May 2021. Reopening initiates have restored number of jobs lost due to COVID-19 restrictions.
GlobalData Country Risk Index (GCRI) - Q4 2021
Norway ranked seventh out of 136 nations in the GCRI Q4 2021. The country’s score is in the very low risk nations band (below 30). Norway’s overall risk score is lower than the West European countries and world average in GCRI Q4 2021. The country had an overall score of 21.7 and performed well (compared to the West Europe and world averages) in the parameter of macroeconomic, political, demographic, legal, environment.
GCRI Methodology
GlobalData’s unique Country Risk Model determines the existing and future level of country risk by assessing various qualitative and quantitative factors. The index is designed to help firms formulate their global business strategies based on historical developmentsin an economy and future expectations.
The Country Risk Index incorporates the latest available macroeconomics, political, social, technological, environmental, and legal data from a range of recognized national and international statistical sources and incorporates proprietary data from GlobalData. West European nations in this publication include Switzerland, Sweden, Finland, Germany, Denmark, Iceland, the Netherlands, Austria, Norway, Ireland, the UK, Belgium, Luxembourg, France, Italy, Spain, Greece, and Portugal.
About the report
GlobalData Macroeconomic Outlook report is designed to provide detailed macro-economic analysis which will help clients in their business planning, investment and strategic decisions, and analysis. It also provides a quick view of the current situation and the risk score of the country in comparison to region and world based on the proprietary risk framework. The report also highlights key strengths, weaknesses, opportunities, and threats in each of the pillars of PESTLE, economic growth prospects, and key events which can impact the country’s future outlook.
More Details: Norway PESTLE Insights - A Macroeconomic Outlook Report
Related Data & Insights
Still looking?
Don’t wait - discover a universe of connected data & insights with your next search. Browse over 28M data points across 22 industries.
Explorer
Access more premium companies when you subscribe to Explorer