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2018 oecd-economic-survey-strengthening-capacity

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Presentation for launch of the Economic Survey of Norway 2017

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2018 oecd-economic-survey-strengthening-capacity

  1. 1. www.oecd.org/eco/surveys/economic-survey-norway.htm OECD ECONOMIC SURVEY OF NORWAY Thriving in a changing world Oslo, Tuesday 19 December 2017 OECD OECD Economics
  2. 2. Norway’s GDP per capita remains impressive 2Source: OECD National Accounts database, and OECD Analytical Database. GDP per capita, constant USD prices, 2010 PPP 0 10 20 30 40 50 60 70 0 10 20 30 40 50 60 70 1970 72 74 76 78 80 82 84 86 88 90 92 94 96 98 2000 2 4 6 8 10 12 14 16 Thousands OECD Norway Norway (Mainland) Thousand Thousand
  3. 3. Inequality is low 3 1. The Gini coefficient ranges from zero to 1, zero indicating all individuals have the same income; 1 indicating one individual receives all income. Source: OECD Income Distribution Database (IDD). 0.20 0.25 0.30 0.35 0.40 0.45 0.50 NOR SWE DNK DEU FIN FRA OECD Inequality (Gini coefficient)¹ of market income and disposable (net) income Inequality of market income Inequality of disposable income OECD Gini index, market income OECD Gini index, disposable income
  4. 4. Employment is a key driver of low inequality and high well-being 4 0 5 10 15 20 25 DNK NOR FRA SWE DEU FIN EU28 Gender wage gap 2015 or latest available % of male median wage
  5. 5. Real GDP growth is picking up 5Source: OECD Analytical Database; Norges Bank. -4 -2 0 2 4 6 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Real GDP growth (mainland) Real GDP (Mainland) Y-o-Y % change
  6. 6. Labour costs remain high 6 80 100 120 140 160 180 200 220 80 100 120 140 160 180 200 220 2000 2002 2004 2006 2008 2010 2012 2014 2016 Index 2000 = 100Index 2000 = 100 Cost-competitiveness Euro-denominated unit labour cost index Denmark Norway (Mainland) Sweden Source: OECD Analytical database, and OECD Economic Outlook database.
  7. 7. Productivity has slowed 7 0.0 0.5 1.0 1.5 2.0 2.5 3.0 0.0 0.5 1.0 1.5 2.0 2.5 3.0 2000 2002 2004 2006 2008 2010 2012 2014 2016 % change% change Trend in real labour productivity growth Per hour worked Norway (mainland) OECD Source: OECD Analytical database, and OECD Economic Outlook database.
  8. 8. Maintaining macroeconomic and financial stability 8
  9. 9. Inflation remains well anchored 9 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 % Long term CPI growth and expectations Expected inflation 2 years ahead CPI 10-year m.a, annual change Source: Norges Bank ; OECD analytical database.
  10. 10. Adjustment of the fiscal rule implies an end to fiscal expansion 10 0 1 2 3 4 5 6 7 8 9 2000 2004 2008 2012 2016 2020 2024 Structural non-oil deficit 3 percent path % of trend mainland GDP Source: Ministry of Finance.
  11. 11. Recommendations for macroeconomic policy 1. Normalise the monetary stance as forecast, with rate increases starting in late 2018 2. Focus on restraint in government spending and public-service efficiency in light of the adjusted fiscal rule 11
  12. 12. Household debt remains high 12 100 120 140 160 180 200 220 240 260 100 120 140 160 180 200 220 240 260 2000 2002 2004 2006 2008 2010 2012 2014 2016 Household debt and house prices Household debt (left) Real house price (right) % of disposable income Index 2000 = 100 Source: Statistics Norway; Norges Bank ; and OECD Analytical database.
  13. 13. House prices have fallen in recent months, especially in Oslo 13 Source: Statistic Norway; and Real Estate Norway (Eiendom Norge). 90 100 110 120 130 140 150 90 100 110 120 130 140 150 2014 2015 2016 2017 Index 2014 = 100Index 2014 = 100 Oslo including Bærum (quaterly, existing dwellings) Norway (monthly)
  14. 14. Recommendation regarding the housing market • Be prepared to respond to a hard landing in the housing and debt markets. This should include, as necessary, delay to monetary policy normalization and the introduction of targeted fiscal policy 14
  15. 15. Improving business policies 15
  16. 16. Norwegian business operates in a high cost environment 16Source: Eurostat. Hourly labour costs, 2016 0 10 20 30 40 50 60 0 10 20 30 40 50 60 POL ESP GBR ITA EA19 DEU FIN FRA SWE DNK NOR EUREUR
  17. 17. There is room to improve regulation 17 0.0 0.5 1.0 1.5 2.0 2.5 3.0 NLD GBR AUT DNK NZL AUS DEU SVK ITA EST FIN PRT HUN BEL CZE JAP CAN ESP IRL LUX NOR FRA OECD ISL CHE CHL SWE USA LVA POL SVN GRC KOR MEX ISR TUR OECD Product Market Regulation (PMR) indicator, 2013 Scale 0-6 from least to most restrictive Source: OECD Product Market Regulation Database.
  18. 18. Recommendations for maintaining a successful business sector 1. Complete the programme of income-tax rate cuts and consider further reductions 2. Continue strengthening competition policy 3. Reduce state stakes in business further 4. Strengthen routes to recovery in the insolvency regime 5. Replace the taxi-licencing system 18
  19. 19. Strengthening skills, encouraging employment 19
  20. 20. Scores in mathematics and science remain middle-ranking 20 410 430 450 470 490 510 530 550 2000 2003 2006 2009 2012 2015 B. Mathematics 410 430 450 470 490 510 530 550 2000 2003 2006 2009 2012 2015 A. Reading Average PISA score 410 430 450 470 490 510 530 550 2000 2003 2006 2009 2012 2015 C. Sciences Norway OECD Top 3 OECD Bottom 3 OECD Source: OECD PISA 2000-2015 Databases.
  21. 21. Recipiency of Disability Benefit remains an issue 21 0.0 0.5 1.0 1.5 2.0 2.5 2008 2017 A. Age 18-34 0 5 10 15 20 25 30 35 40 2008 2017 B. Age 50-67 People on Disability Benefit, % of age category Source: Norwegian Labour and Welfare Administration (NAV).
  22. 22. Recommendations for maintaining a successful business sector 1. Raise employer awareness about the incentives to offer apprenticeship places 2. Strengthen employers’ incentives to offer apprenticeship places by reducing apprentice wages or increasing subsidies 3. Press on with reform to sick leave and disability benefit including through a longer employer- financed phase of sick leave and tighter medical assessment 22
  23. 23. Improving investment in transport infrastructure 23
  24. 24. Norway invests heavily in transport infrastructure 24 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2000 2005 2010 2015 % of GDP% of GDP General Government investment in transport Denmark Norway (Mainland) Sweden Source: OECD National Accounts database.
  25. 25. Major road projects initiated in the period 2014-17 25 Corridor Number of projects Net benefit (NOK million) Cost (NOK million) Net Benefit to Cost ratio 1. Oslo-Svinesund-Kornsjø 1 −860 1830 −0.47 2. Oslo-Ørje/Magnor 2 −1790 4750 −0.38 3. Oslo-Grenland-Kristiansand-Stavanger 7 12080 33890 +0.36 4. Stavanger-Bergen-Ålesund-Trondheim 4 18020 26800 +0.67 5. Oslo-Bergen/Haugesund. Branch via Sogn to Florø 4 −2320 8950 −0.26 6. Oslo-Trondheim. Branches to Måløy, Ålesund, and Kristiansund 3 5210 6500 +0.80 7. Trondheim-Bodø. Branches to the Swedish border 2 −1740 5670 −0.31 8. Bodø-Narvik-Tromsø-Kirkenes. Branches to Lofoten and the national border 2 −530 1890 −0.28 Source: Sager (2016).
  26. 26. Recommendations for maintaining a successful business sector 1. Strengthen the influence of cost-benefit analysis in project selection 2. Improve checks against cost inflation after projects are selected 26
  27. 27. More Information… www.oecd.org/eco/surveys/economic-survey-norway.htm OECD OECD Economics Disclaimers: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. 27

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