Press release | Date: 2016-05-19 | Ministry of Finance| No: 31/2016
Today a mission from the International Monetary Fund (IMF) presented its annual assessment of the Norwegian economy and Norwegian economic policy.
IMF predicts a GDP growth for mainland Norway of about 1 per cent this year, with a recovery taking root in 2017. This is in line with the Government’s projections in the Revised National Budget for 2016. Unemployment is projected to rise further throughout this year, before declining in 2017.
The IMF delegation concludes that the Norwegian monetary policy has allowed the exchange rate to absorb some of the shocks from low oil prices and reduced demand from oil related activities, and helped improve cost competitiveness relative to peer countries. The fiscal framework has helped insulate the mainland economy from energy price volatility and excessive reliance on oil and gas revenues.
- I am pleased to note the IMF-delegation’s conclusion that the Norwegian economic institutions have proven their effectiveness, says finance minister Siv Jensen. I am further pleased to note that IMF confirms the appropriateness of the Government’s economic policy.
The delegation points out that Norwegian policy makers are faced with intertwined challenges. In addition to the short-term task of curbing the downturn, there is the continuing challenge of managing the transition away from oil dependence. Fiscal measures should avoid inhibiting this necessary economic adjustment.
- I agree with the Delegation that policies to help facilitate a smooth transition to a new, less oil-dependent, growth model are still needed. We need to keep strengthening our competitiveness, says Jensen.
The delegation concludes that Norway’s banking sector performance remains relatively strong, and overall financial stability risks appear contained. The report also points out that relaxing constraints on new property construction could boost the supply of housing. Also, reducing the level of protection and subsidy to agriculture would have positive distributional effects and also help free up resources for less expensive and more effective policies to preserve rural communities. Further reforms to sickness and disability benefits are called for that would help maintain labor force participation and relieve pressures on the welfare system going forward.
The delegation was headed by Mission Chief Thomas Dorsey.
The IMF staff will complete a more extensive report on the Norwegian economy and economic policy that will be presented to the IMF’s Executive Board.