OECD ECONOMIC SURVEY OF NORWAY

Transcription

1 OECD ECONOMIC SURVEY OF NORWAY Maintaining a successful economy in a changing world Centre for Monetary Economics, Oslo, Tuesday 19 December OECD Economics OECD

2 Norway s GDP per capita remains impressive Thousand GDP per capita, constant USD prices, 2010 PPP OECD Norway Norway (Mainland) Thousand GDP per capita is equivalent to about US dollars, a material living standard very few countries have achieved 0 Source: OECD National Accounts database, and OECD Analytical Database. 2

3 Living standards are high and inequality is low Environmental quality Personal security Subjective well-being Jobs and earnings Work and life balance A. Better Life Index Norway OECD Other Nordic Civic engagement Education and skills Health status Housing Income Social connections Poverty rate after taxes and transfers Poverty rate before taxes and transfers B. Equality indicators Norway OECD Other Nordic Gini (disposable income) P50/P10 disposable income decile P50/P10 disposable income decile ratio Gini (gross income) P90/P50 disposable income decile ratio Note: Other Nordic group comprises Denmark, Finland and Sweden. Indicators are rescaled from 0 (worst) to 10 (best). Source: OECD Better Life Index

4 The economy is picking up Y-o-Y % change 6 Real GDP growth (mainland) Real GDP (Mainland) Mainland real GDP is projected to grow by over 2% in 2018 and 2019 Business investment and household consumption growth will be key drivers Source: OECD Analytical Database; Norges Bank. 4

5 Key themes of the Survey Macroeconomic risks Public-spending efficiency Business competitiveness 5

6 Little risk from consumer-price inflation % Long term CPI growth and expectations 3,5 3,0 2,5 2,0 1,5 1,0 0,5 Expected inflation 2 years ahead CPI 10-year m.a, annual change 0, Trend outcomes and expectations of consumer-price inflation remain close to Norges Bank s 2.5% target Source: Norges Bank ; OECD analytical database. 6

7 Adjustment of the fiscal rule: a good move % of trend mainland GDP 9 8 Structural non-oil deficit 3 percent path Source: Ministry of Finance. 7

8 Housing market and related debt: the No.1 risk Household debt and house prices % of disposable income Index 2000 = Household debt (left) Real house price (right) Source: Statistics Norway; Norges Bank ; and OECD Analytical database. 8

9 House prices have fallen in recent months, especially in Oslo Index 2014 = Oslo including Bærum (quaterly, existing dwellings) Norway (monthly) Index 2014 = Source: Statistic Norway; and Real Estate Norway (Eiendom Norge). 9

10 What problems could a housingmarket correction generate? Demand downturn via from weakening household consumption (more likely) Direct threat to banking sector (less likely) 10

11 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. 11

12 Other macroeconomic risks Oil price External demand, particularly Europe Domestic upswing failure 12

13 Public-spending efficiency: comprehensive public services and investment absorb considerable resources % of GDP B. Total disbursements % of GDP MEX IRL KOR TUR CHE AUS LVA USA JPN CZE ISR EST CAN POL NZL OECD GBR SVK LUX ESP NLD DEU PRT ISL SVN HUN EA15 ITA SWE GRC AUT BEL DNK FIN FRA NOR 0 % of GDP 60,0 50,0 40,0 30,0 20,0 10,0 A. Total revenues, net of property income % of GDP Note: Norway Total mainland receipts minus mainland property income, as % of mainland GDP; Total disbursements as % of mainland GDP. 0,0 MEX IRL USA AUS KOR TUR CHE JPN LVA CAN ISR ESP GBR POL SVK NZL CZE EST SVN PRT LUX NLD HUN DEU EA15 ITA NOR AUT SWE GRC BEL FIN DNK FRA ISL 0 13

14 Norway invests heavily in transport infrastructure General Government investment in transport % of GDP % of GDP 2,0 2,0 Denmark Norway (Mainland) Sweden 1,8 1,8 1,6 1,6 1,4 1,4 1,2 1,2 1,0 1,0 0,8 0,8 0,6 0,6 0,4 0,4 0,2 0,2 0, , Source: OECD National Accounts database. 14

15 The key problems appear to be: 1. Gold plating in the planning process 2. Final selection includes poor-ranking projects in terms of economic criteria 15

16 Business competitiveness 16

17 Business competitiveness: cost challenges EUR 60 Hourly labour costs, 2016 EUR POL ESP GBR ITA EA19 DEU FIN FRA SWE DNK NOR At 50 euros per hour, Norway has much higher average labour costs than many countries Business conditions on other fronts need to be topranking for Norwegian business to compete 0 Source: Eurostat. 17

18 And (as elsewhere) productivity slowdown % change Trend in real labour productivity growth Per hour worked % change 3,0 Norway (mainland) OECD 3,0 2,5 2,5 2,0 2,0 1,5 1,5 1,0 1,0 0,5 0,5 0, Norway s trend labour productivity growth fell from about 2.5% in 2000 to 0.75% in ,0 Source: OECD Analytical database, and OECD Economic Outlook database. 18

19 1. Taxation The areas where policy can make the biggest difference are probably: 2. Education 19

20 Other areas for policy attention 1. Competition law, state ownership (market competitiveness) 2. Red tape, insolvency (firm dynamics) 3. Innovation policy 4. Disruption 5. Labour supply 20

21 Thank you OECD Economics OECD 21

22 Extra slides 22

23 Major road projects initiated in the period Corridor Number of projects Net benefit (NOK million) Cost (NOK million) Net Benefit to Cost ratio 1. Oslo-Svinesund-Kornsjø Oslo-Ørje/Magnor Oslo-Grenland-Kristiansand-Stavanger Stavanger-Bergen-Ålesund-Trondheim Oslo-Bergen/Haugesund. Branch via Sogn to Florø Oslo-Trondheim. Branches to Måløy, Ålesund, and Kristiansund Trondheim-Bodø. Branches to the Swedish border Bodø-Narvik-Tromsø-Kirkenes. Branches to Lofoten and the national border Source: Sager (2016). 23

24 There is room to improve regulation 3,0 OECD Product Market Regulation (PMR) indicator, 2013 Scale 0-6 from least to most restrictive 2,5 2,0 1,5 1,0 0,5 0,0 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 The OECD s Services Trade Regulation Index also points to middle-ranking performance Source: OECD Product Market Regulation Database. 24

25 Norway s PISA scores in mathematics and science remain middle-ranking A. Reading Average PISA score 550 Norway Top 3 OECD 550 B. Mathematics 550 OECD Bottom 3 OECD C. Sciences Globalisation reinforces the importance of skills-based education Many vocational-stream students do not complete courses Source: OECD PISA Databases. 25

26 Recipiency of Disability Benefit remains an issue People on Disability Benefit, % of age category A. Age B. Age ,5 2,0 1,5 1,0 0,5 0, Benefit recipiency among older cohorts is falling but remains high Recipency is becoming more common in young cohorts Source: Norwegian Labour and Welfare Administration (NAV). 26