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- GDP (PPP):
- $345.2 billion
- 2.2% growth
- 1.5% 5-year compound annual growth
- $66,937 per capita
- Inflation (CPI):
- FDI Inflow:
The Norwegian economy’s strong competitiveness is built on openness and transparency with policies that support dynamic trade and investment. The quality of the legal and regulatory framework is among the world’s highest, institutionalizing the effective rule of law. The planned tax reform bill focuses on lowering the corporate income tax rate from 27 percent to 22 percent by 2018.
Economic Freedom Snapshot
- 2016 Economic Freedom Score: 70.8 (down 1.0 point)
- Economic Freedom Status: Mostly Free
- Global Ranking: 32nd
- Regional Ranking: 16th in Europe
- Notable Successes: Rule of Law, Open Markets, and Regulatory Efficiency
- Concerns: Control of Government Spending and Labor Freedom
- Overall Score Change Since 2012: +2
The government has focused on containing expensive welfare programs, with the accumulation of assets from hydrocarbon production in the National Wealth Fund providing a cushion for fiscal stimulus. The budget deficit is narrowing, and public debt remains under control. However, state ownership in key industries is still substantial.
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. Fisheries, metal, and oil are the most important commodities. Norway 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, in its Government Pension Fund–Global, valued at $900 billion.
Norway is one of the world’s least corrupt countries, ranked fifth out of 175 countries in Transparency International’s 2014 Corruption Perceptions Index. Well-established anti-corruption measures reinforce a cultural emphasis on government integrity. The judiciary is independent, and the court system operates fairly at the local and national levels. Private property rights are securely protected, and commercial contracts are reliably enforced.
The top personal income tax rate is 47.8 percent, and the corporate tax rate is 27 percent. Other taxes include a value-added tax, a tax on net wealth, and environmental taxes. The overall tax burden equals 40.8 percent of GDP. Government spending amounts to 44 percent of total domestic output. Public debt remains around 30 percent of GDP. Large oil revenues have preserved budget surpluses.
The entrepreneurial framework is transparent and efficient. The labor market lacks flexibility, but the non-salary cost of employment is not high in comparison to other countries in the region. Monetary stability has been well maintained. The nearly 10 percent depreciation of the krone in 2015 due to lower oil prices increased the competitiveness of non-commodity exports and led the government to consider cuts in subsidies for agricultural products.
Norway has a low 1.1 percent average tariff rate. The agricultural sector is heavily subsidized and protected from international competition. State-owned enterprises distort the country’s economy. The financial sector is market-driven, although the state retains ownership of the largest financial institution.