IMF: - Norway’s economy is recovering

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 1¾ per cent this year and 2¼ per cent in 2018. Unemployment is expected to gradually decline to just below 4 per cent by 2018.

The IMF-delegation’s projections and assessments are in line with the newly released Revised National Budget for 2017.

– I am pleased to hear that the IMF-mission in general shares my own assessment of the Norwegian economy and the challenges we are facing. The economic downturn has been managed well through supportive fiscal and monetary policies. I agree that fiscal policy should remain supportive until the recovery is on a more solid footing, says Finance Minister Siv Jensen.

The delegation welcomes the recent revision of the estimated expected real return of the Pension Fund from 4 to 3 percent. This revision reflects the lower expected returns in light of the new norm of “low for long” global interest rates.

The IMF also draws attention to circumstances that could threaten the budding recovery. Weaker than projected global growth or re-emergence of European bank stress could weaken Norwegian economic growth. Domestically, a sharp and widespread correction of house prices could lower consumption and residential investment with ripple effects on corporate earnings and banks.

The delegation finds that the overall banking system remains resilient. However, high and increasing household debt and house prices constitutes a vulnerability for the financial system.

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.

The delegation was headed by Mission Chief Thomas Dorsey.

Further reading:

• Concluding Statement from IMF 
• Press release and staff report (5 July 2017)
• Webcast from the presentation