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ECONOMY

OECD praises Norway over strong economy

Norway has weathered the economic crisis well thanks to its oil riches but must be careful to avoid a property bubble, the OECD said on Wednesday.

"Norway continues to benefit from its well-managed petroleum wealth and sound macroeconomic policies," the Organisation for Economic Cooperation and Development said.

"The strength of the economy and prudent supervision have helped the financial system to weather the financial crisis well," it added, noting that "the macroeconomic policy challenge has shifted towards preserving the momentum of growth."

Norway, the world's seventh-biggest oil exporter and second-largest natural gas exporter, places its oil and gas riches in a huge pension fund, which it in turn invests in international stocks and bonds.

Under current rules, the government can use only a limited amount of that money — four percent of the total value of the fund — to balance its budget, which would otherwise post a deficit.

Noting that Norway was to use "just under four percent" this year, the OECD said in a review of the economy that "there would be room within the fiscal guidelines to go for stronger expansion should economic activity turn out to be significantly weaker than projected."

Norway, which is not a member of the European Union, is expected to show growth of 2.7 percent this year excluding oil and gas and shipping revenues, and of 3.6 percent in 2013.

In 2011, growth was 2.6 percent.

However, in the event of an intensification of the eurozone crisis, Oslo should use monetary policy — rate cuts — as its main weapon, the OECD said.

The organisation hailed Norway's central bank which last year suspended a cycle of tightening its key rate, then lowered it by half a point in December. It now stands at 1.75 percent.

The relatively low rate could however lead to a rise in housing costs, and the OECD, like the International Monetary Fund last week, warned against high household debt and elevated housing prices.

"The strong financial supervision system should be maintained, including by ensuring that banks comply with higher capital requirements," the OECD said.

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SAS

‘We agree to disagree’: Still no progress in marathon SAS strike talks

By lunchtime on Friday, talks between the Scandinavian airline SAS and unions representing striking pilots were still stuck on "difficult issues".

'We agree to disagree': Still no progress in marathon SAS strike talks

“We agree that we disagree,” Roger Klokset, from the Norwegian pilots’ union, said at lunchtime outside the headquarters of the Confederation of Swedish Enterprise in Stockholm, where talks are taking place. “We are still working to find a solution, and so long as there is still some point in continuing negotiations, we will do that.” 

Mats Ruland, a mediator for the Norwegian government, said that there were “still several difficult issues which need to be solved”. 

At 1pm on Friday, the two sides took a short break from the talks for lunch, after starting at 9am. On Thursday, they negotiated for 15 hours, breaking off at 1am on Friday morning. 

READ ALSO: What’s the latest on the SAS plane strike?

Marianne Hernæs, SAS’s negotiator on Friday told journalists she was tired after sitting at the negotiating table long into the night. 

“We need to find a model where we can meet in the middle and which can ensure that we pull in the income that we are dependent on,” she said. 

Klokset said that there was “a good atmosphere” in the talks, and that the unions were sticking together to represent their members.

“I think we’ve been extremely flexible so far. It’s ‘out of this world’,’ said Henrik Thyregod, with the Danish pilots’ union. 

“This could have been solved back in December if SAS had not made unreasonable demands on the pilots,” Klokset added. 

The strike, which is now in its 12th day, has cost SAS up to 130m kronor a day, with 2,550 flights cancelled by Thursday, affecting 270,000 passengers. 

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