Economic Overview
For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
Norway's Covid-19-led economic downturn remained limited compared to most European countries, with GDP growing an estimated 3.6% in 2022 (from 3.9% one year earlier – IMF). Though still strong, private consumption (which accounts for 45% of GDP) decelerated in 2022 due to inflation pressures and declining consumer confidence. In the same year, Norway benefited from higher oil and gas prices (the country’s main exports) and increased exports to Europe following the EU sanctions against Russia (Norway’s exports almost doubled in the first eleven months of 2022). High inflation and policy tightening will weigh on domestic demand in 2023, as the worsening economic situation of the main trading partners will also contribute to a deceleration in the growth rate, forecasted at 2.6% this year and 2.2% in 2024 by the IMF (0.7% and 1.3%, respectively, according to OECD).
Norway’s public finances are sound. Norway's government gross debt did not expand substantially in the aftermath of the Covid-19 crisis unlike in the rest of Europe, despite public monetary support and a comprehensive loan programme to the banks. In 2022, the debt-to-GDP ratio was estimated at 40.3%, down from 43.4% one year earlier (IMF). The ratio is expected to follow a downward trend over the forecast horizon, at around 39%. The government budget deficit also decreased: it was estimated at 8.6% of GDP in 2022 compared to 10.1% one year earlier, thanks to direct transfers from the oil industry and withdrawals from the sovereign wealth fund. The household electricity support scheme will be extended into 2023 at a cost of around 1.2% of mainland GDP. Overall, the IMF forecasts a deficit of 8.1% this year and 8.2% in 2024. Moreover, the 2023 budget envisages a 9.4% reduction in the spending from the Government Pension Fund Global, to NOK 316,8 billion (official government figures). Such contractionary fiscal policy should help reduce inflation, which reached its highest levels in decades in 2022 (4.7%). In the same direction, the Norges Bank increased the policy rate further in November by 0.25 percentage points to 2.5%. Inflation is expected to decelerate gradually to 3.8% in 2023 and 2.7% the following year.
Norway is a rich country, with one of the highest GDP per capita in the world (estimated at USD 78,128 PPP in 2022 by the IMF). The nation also scores at the top of the United Nations’ Human Development Index ranking. Unemployment stood at 3.9% in 2022 and the labour market remained tight. The government expects employers to continue to experience problems in recruiting within several professions in the short term, with unemployment projected at 3.8% in 2023 (IMF).
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
| GDP (billions USD) | 367.63 | 490.29 | 579.27 | 554.11 | 564.40 |
| GDP (Constant Prices, Annual % Change) | -1.3 | 3.9 | 3.3 | 2.1 | 2.5 |
| GDP per Capita (USD) | 68,399 | 90,764 | 106,328 | 101,103 | 102,367 |
| General Government Balance (in % of GDP) | -11.7 | -9.5 | -6.7 | -6.8 | -6.7 |
| General Government Gross Debt (in % of GDP) | 46.1 | 42.7 | 39.6 | 38.8 | 38.5 |
| Inflation Rate (%) | 1.3 | 3.5 | 5.8 | 4.9 | 2.8 |
| Unemployment Rate (% of the Labour Force) | 4.6 | 4.4 | 3.3 | 3.5 | 3.7 |
| Current Account (billions USD) | 4.05 | 66.81 | 175.85 | 140.68 | 130.79 |
| Current Account (in % of GDP) | 1.1 | 13.6 | 30.4 | 25.4 | 23.2 |
Source: IMF – World Economic Outlook Database , October 2021
Country Risk
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