Embed This Data
- GDP (PPP):
- $356.2 billion
- 1.6% growth
- 1.7% 5-year compound annual growth
- $68,430 per capita
- Inflation (CPI):
- FDI Inflow:
Norway’s competitive economy benefits from openness to global commerce and a regulatory environment that encourages entrepreneurial activity. Monetary stability is well maintained, and the independent judicial system provides strong protection of property rights.
The accumulation of assets from hydrocarbon production in the National Wealth Fund has provided a cushion for fiscal stimulus. In an effort to attract foreign investment and diversify the oil-dependent economy, a multi-year measure to reduce the top corporate tax rate has lowered the tax rate to 25 percent, with further planned reductions to 24 percent in 2017 and 23 percent in 2018.
Norway has been a member of NATO since 1949. Voters have twice rejected membership in the European Union, but Norway is a party to a European Free Trade Association agreement. Prime Minister Erna Solberg of the Conservative Party was elected in September 2013 and leads a center-right coalition minority government. Norway is one of the world’s most prosperous countries. It saves a large portion of its petroleum-sector revenues, including dividends from the partially state-owned Statoil and taxes from oil and gas companies operating in Norway. Low oil prices have been a drag on the economy, and Norway made a withdrawal from its Government Pension Fund Global for the first time ever in March 2016.
Private property rights are securely protected, and commercial contracts are reliably enforced. The judiciary is independent, and the court system operates fairly at the local and national levels. Norway is one of the world’s least corrupt countries and is ranked fifth out of 168 countries in Transparency International’s 2015 Corruption Perceptions Index. Well-established anticorruption measures reinforce a cultural emphasis on government integrity.
The top personal income tax rate is 47.8 percent, and the corporate tax rate has been cut to 25 percent. Other taxes include a value-added tax and environmental taxes. The overall tax burden equals 39.1 percent of total domestic income. Government spending has amounted to 45.3 percent of total output (GDP) over the past three years, and budget surpluses have averaged 8.1 percent of GDP. Public debt is equivalent to 27.9 percent of GDP.
Norway’s transparent and efficient regulatory framework facilitates entrepreneurial activity and innovation. The labor market lacks flexibility, but the nonsalary cost of employment is not high in comparison to other countries in the region. Monetary stability has been well maintained. The IMF has recommended that the government reduce its restrictive subsidies on agriculture and supply controls on the housing market.
Trade is important to Norway’s economy; the value of exports and imports taken together equals 69 percent of GDP. The average applied tariff rate is 1.2 percent, and nontariff barriers restrict agricultural imports. State-owned enterprises distort the economy. Credit is allocated on market terms, and banks offer a wide array of services. The government retains ownership of Norway’s largest financial institution.