Revised Budget 2018:

Stronger growth, lower unemployment and a more sustainable welfare state

The Norwegian economy has recovered from the downturn induced by the 2014 drop in the oil price and is now characterized by optimism and solid growth. The 2018 Fiscal Budget approved last autumn is still well adapted to the economic situation, and thus its key features remain in the Revised Budget.

"The positive development in the Norwegian economy confirms the merits of our economic policy agenda. The Government has led the country through challenging times. When the oil price drop hit the economy, we used the fiscal budget to curb unemployment and to promote restructuring and new growth. The revised budget paves way for a continued positive development", says Minister of Finance Siv Jensen (The Progress Party).

The Government upholds the neutral fiscal stance adopted last autumn. The use of petroleum revenues is estimated at NOK 225.5 billion in 2018, which is equivalent to 2.7 per cent of the capital of the Government Pension Fund Global. The real, underlying growth in fiscal spending is estimated at 1.7 per cent.

In the 2018 budget, the focus on education, transport, health and high quality local government services continues, as does the upgrading of Norway’s defence and infrastructure.

"The Government lowers taxes, strengthens welfare, ensures national security and takes steps to create more profitable employment opportunities. By making the welfare state more sustainable, we are also preparing our country for the future. We are building a more resilient and adaptive economy and at the same time accommodating for a more climate and environmental friendly society and economy, We want to ensure that our society is a good place to live – both today and for the future", says Minister Jensen.

More information on the Norwegian Fiscal Policy Framework 

 

Table 1 Key figures for the Norwegian economy1

 

Billion NOK2

     

 

2017

2017

2018

2019

Private consumption

1 474,7

2,3

2,6

2,9

Public consumption

790,6

2,0

1,4

--

Gross fixed investment

784,2

3,5

3,3

3,4

Of which: Petroleum extraction and pipeline transport

149,5

-4,0

5,2

8,0

              Business sector Mainland Norway

255,3

5,1

8,8

5,4

              Housing

203,4

7,1

-5,2

-1,7

              Public sector

178,6

5,8

1,6

--

Demand from Mainland Norway3

2 902,6

3,0

2,2

2,3

Exports

1 148,2

0,8

2,5

2,2

Of which: Crude oil and natural gas

441,8

1,9

-2,3

-3,0

              Goods except oil and gas

381,5

2,2

4,6

4,9

              Services except oil, gas and shipping

224,9

-2,2

9,1

6,8

Imports

1 082,2

2,2

4,0

3,8

Gross domestic product

3 279,4

1,8

1,9

1,9

Of which: Mainland Norway

2 803,8

1,8

2,5

2,6

Other key figures:

       

   Employment, persons (percentage growth)

 

1,1

1,3

1,1

   Unemployment rate, LFS (level)

 

4,2

3,8

3,7

   Unemployment rate, registered (level)4

 

2,7

2,3

2,2

   Annual wage

 

2,3

2,8

--

   Consumer price index (CPI)

 

1,8

2,1

1,7

   Underlying inflation (CPI-ATE)

 

1,4

1,6

2,0

   Crude oil price, NOK per barrel (level)

 

445

519

484

   Three-month money market rates, pct5

 

0,9

1,1

1,4

   Import-weighted exchange rate (yearly change in pct.)6

 

-0,8

0,9

1,0

   Growth in GDP, Norwegian trading partners7

 

2,8

2,8

2,4

1) Percentage change from previous year unless otherwise stated.
2) Preliminary national accounts in 2017-prices.
3) Excluding inventory changes.
4) Measured as per cent of the LFS labour force.
5) Technically calculated using forward prices in April.
6) Positive number indicates a depreciation of the krone.
7) Norway’s 25 largest trading partners weighted by share of traditional export.

Sources: Statistics Norway, Norwegian Labour and Welfare Administration, Norges Bank, Reuters, Macrobond, ICE and Ministry of Finance

 

Key figures for the Fiscal Budget and Government Pension Fund. NOK billion

 

2016

2017

2018

1. Fiscal Budget

     

Total revenues

1 162.5

1 225.9

1 304.4

   Revenues from petroleum activities

152.6

194.4

249.3

   Revenues excl. petroleum activities

1 009.9

1 031.5

1 055.1

Total expenditures

1 246.1

1 280.9

1 325.5

   Expenditures on petroleum activities

27.8

26.6

25.0

   Expenditures excl. petroleum activities

1 218.3

1 254.3

1 300.5

Fiscal budget surplus before transfers from the Pension Fund Global

-83.6

-55.0

-21.1

Net revenues from petroleum activities

124.8

167.8

224.3

=  Non-oil budget surplus

-208.4

-222.8

-245.4

+  Transfers from the Pension Fund Global

212.5

231.4

245.4

=  Fiscal Budget surplus

4.1

8.6

0.0

2. Government Pension Fund

     

    Net transfer to the Pension Fund Global

-87.7

-63.5

-21.1

+  Interest and dividends on the Pension Fund

196.6

203.6

211.6

3. Fiscal Budget and Government Pension Fund
consolidated surplus
 

113.0

148.6

190.5

Source: Ministry of Finance.

 

General government financial balance. NOK million

 

2016

2017

2018

Central government financial balance

137 206

163 271

223 457

    Fiscal Budget surplus and Surplus in Government Pension Fund

113 020

148 646

190 537

        Non-oil budget surplus

-208 388

-222 826

-245 412

        Net revenues from petroleum activities

124 779

167 847

224 349

        Interest and dividends on the Pension Fund

196 629

203 625

211 600

    Surplus in other central government and social security accounts

1 470

1 500

1 507

Definitional differences between Fiscal Budget and national accounts1

22 717

13 125

31 413

+  Local government financial balance

-12 710

-16 933

-20 728

=  General government financial balance

124 496

146 339

202 730

    In per cent of GDP

4.0

4.5

5.9

1) Includes central government accrued but not recorded taxes. Direct investments in state enterprises, including government petroleum activities, is defined as financial investments in the national accounts.

Sources: Statistics Norway and Ministry of Finance.