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OECD on Norway: High living standard, appropriate economic policy, but narrower fiscal space

The OECD today presented its biannual survey of the Norwegian economy with recommendations on how to meet challenges ahead. The survey emphasizes that economic growth is robust and economic policy appropriate. Yet, sustaining high levels of economic output and comprehensive public services for the future is a challenge.

"The OECD provides support for the government’s economic policy. Spending of petroleum revenues lies well below the three-percent guideline, accounting for slower expected growth in the fund going forward," says Finance Minister Siv Jensen.

Narrower fiscal space leaves less room for new spending initiatives in coming years. Growth in the wealth fund is expected to slow and spending commitments will rise as the population ages. To stay within the fiscal rule will require higher labour supply and increased value for money in public spending.

The economy is vulnerable to political and economic developments globally. The OECD stresses the risks from trade tensions, including from brexit, and from the uncertainty on oil prices. Domestically, property markets and household debt pose risks to the economy.

"I share the OECD’s assessment of the risks to the Norwegian economy. External risks stem from slower growth among trading partners and rising trade barriers internationally. Yet, the Norwegian economy is robust. When it comes to developments in the housing market, we have implemented a number of measures to address the risk and we see that they work," says Finance Minister Siv Jensen.

The OECD survey discusses the Norwegian labour market at length, addressing among other issues the high proportion of people on health-related benefits.

"High employment and low unemployment are key priorities for the government. We work on a broad basis to include more people in the labour market. I welcome the OECD’s analysis and see it as valuable support in our further effort to increase participation rates," Jensen concludes.

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