Key figures in the Revised National Budget 2021

The pandemic still weighs on the Norwegian economy. However, growth may be strong from the second half of this year. Lower infection rates and a rising share of the population being vaccinated give reason for optimism, although uncertainty remains high.

How fast economic activity picks up is largely a function of infection rates, the speed of vaccination, and how early containment measures can be phased out. To illustrate this uncertainty, the government presents three scenarios for the economic development in the Revised National Budget. The main scenario indicates that we gain control of the virus through vaccination over the next months, and that mainland-GDP will grow by 3¾ percent both this year and the next, see the table below. In this situation unemployment will come back down to low levels over the next year.

Spending of oil revenue is now estimated at 402.6 billion NOK, almost 90 billion more than originally proposed in the 2021 budget last autumn. Extraordinary economic support measures related to the pandemic accounts for a large bulk of the increase.

Fiscal spending in Norway is guided by the fiscal rule. According to this rule, transfers from the Government Pension Fund Global to the central government budget shall, over time, equal the expected real return on the Fund, estimated at 3 percent. In the Revised Budget, oil revenue spending in 2021, as measured by the structural non-oil fiscal deficit, is estimated at 3.7 percent of the value of the Fund at the beginning of the year. This compares to the estimated 3.0 percent in the National Budget.

The fiscal impulse, measuring the difference in spending of oil revenue from 2020 to 2021 as a share of mainland Norway trend GDP, is estimated to be 0.6 percent.

Table: Selected key figures in the Revised National Budget 2021¹

	2020	2021
Mainland Norway gross domestic product	-2.5	3.7
Employment, persons	-1.3	0.5
Unemployment rate, LFS (level)	4.6	4.4
Unemployment rate, registered (level)	5.0	3.5
Structural non-oil fiscal deficit, NOK billion	369.3	402.6
Fiscal impulse2	3.9	0.6
Transfer from the GPFG3	3.7	3.7

¹ Percentage volume change from previous year, unless otherwise stated.

² Structural non-oil fiscal deficit as a percentage of mainland Norway trend GDP. Change from previous year in percentage points. 

³ Structural non-oil fiscal deficit as a percentage of the capital in the Government Pension Fund Global (GPFG) at the beginning of the year. 

Sources: Statistics Norway and the Ministry of Finance.