IMF: Norway has handled the Covid-19 crisis very well

A team from the International Monetary Fund (IMF) today presented its assessment of the Norwegian economy and Norwegian economic policy. The IMF staff has met with Norwegian authorities, academic institutions, and social partners. A more comprehensive report will be discussed by the IMF's board in June.

The IMF mission expects a solid upturn in the Norwegian economy when virus control measures are eased. Real mainland GDP growth is projected at 3.2 percent in 2021, surpassing its pre-pandemic level by year-end. Risks to this outlook includes a slower-than-expected vaccine rollout and unforeseen setbacks in the evolution of the pandemic.

"I am pleased to note that the IMF misson finds our policy response successful in limiting the coronavirus infection rates and the economic downturn in Norway," says Minister of Finance Jan Tore Sanner (Conservative Party).

The mission team supports the government's fiscal policy plan for 2021, underlining that the stimulus should become smaller and more targeted as recovery gathers traction. Reversion to a neutral fiscal stance is appropriate once the Covid-19 crisis is behind Norway.

"I am pleased to see strong support to our emphasis on integrating vulnerable groups into the workforce and on improving the provision of education and skill-enhancing programs. I also agree that it is important not to lose sight of more long-term structural challenges. The challenges we faced before the pandemic on climate, aging and inclusion have not diminished," says the Minister.

The IMF mission argues that Norwegian banks have weathered the crisis well and supports the resent adjustments in the anti-money laundering and terrorist financing (AML/CFT) regulations. Possible risk factors for financial stability are high household debt and banks’ exposure to commercial real estate, together with the fact that we have not yet seen the full impact of the pandemic on the financial sector.

The IMF-team supports the Norwegian climate policy and welcomes Norway’s commitment to become a low emission country by 2050.
"I agree with the IMF when they say that the focus must now be on implementation. Norway's climate goals are ambitious, and it is important that mitigation measures are as cost-efficient as possible," Sanner says.

The delegation was headed by Mission Chief Peter Dohlman.