Economy of Norway
Norway’s economy is a type of mixed economy having state-ownership in some areas. The economy of Norway has shown a rapid increase after the beginning of the industrial era. The country is still prone to business cycles.
In Norway, the standard of living is high if compared to other European countries. It is because of a healthy and integrated welfare system. The main reason for an immense increase in Norway’s economy is the exploitation of natural resources, mainly the North Sea.
According to the UN’s reports of 2016, Norway, Luxembourg, and Switzerland are the only countries with a GDP per capita above $70,000.
Economy before Independence
The economy of Norway before independence was mostly dependent on farming and agriculture. The farming industry combines fishing, hunting, wood, and timber trading.
People living in the North and West were dependent on fish and foreign trade, while those living in the South and East relied on agriculture.
For the first time during the last decades of the 18th century, Norway’s economy jumped during liberalism. After getting independence from Denmark, around 90% of the population lived in rural areas.
Economic Planning and Growth
After the end of World War II, the country’s challenge was to rebuild and take the economic growth to the right track. The ruling party, in 1995, took a firm decision and made a strict social, domestic rule to centralized financial planning. They opposed the Marshall aid program first but then accepted the offer due to a lack of hard currencies. Norway received $400 million from 1948-1952, which made it one of the biggest countries per capita.
Concerning Norway’s Economy
The period from 1950-1973 is known as the golden era. The annual growth rate of the economy was increased by 3.3%. The foreign trade was raised with no unemployment in the country. The inflammation rate was stable. The reason for this is good economic planning.
The GPD gradually went down from 2004-2007, and the growth almost stopped in 2008 after the recession. It started back from 2009 onwards, coming on the right track before it finally showed a positive change from 2010-2017.
Norway’s economy grew by 1.5% in 2017, which was influenced mainly due to domestic demand. Such a massive boost in Norway’s economy is due to the rebound in the labour market and supportive fiscal issues. However, it is expected that economic growth will remain constant or slightly improve in the next few years.
Main Sectors of Industry
The main sectors responsible for Norway’s economic growth are fishing and agriculture. The agricultural field is responsible for 1.9% of the GDP and consists of 2% of the workforce’s employees. Norway is the world’s second-leading producer of seafood after China.
The other industries left, represent 32% of the GDP. The shares of these industries started to rise again after many years of decline, since 2017. Natural and energy resources like oil, gas, forests, and minerals also play a vital role in maintaining the growth of Norway’s economy.
But the value of oil rents recently degraded, and the field that once dominated now offers less than 4% of GDP. The nation is now willing to save oil and gas revenues for upcoming generations. At the end of 2019, Norway had the largest wealth fund globally, estimating over $1.14 trillion.
The service sector of Norway is highly developed. It accounts for three-fourth of the whole population, having 78.9% of the employees. It is responsible for 56.8% of the GDP.
Challenges After COVID 19
The mainland economy of Norway slipped by 6.4% in March. Some sources said that the growth rate was as slow as 15% from April.
On 12th March, Norway’s government imposed a complete lockdown, including the strongest ever peacetime restrictions on citizens to stop the transmission of disease.
The GDP fell by 5.5% in 2020 due to the stoppage of domestic and foreign trades. However, it is expected to grow by 4.7% in 2021.
The coronavirus also led to the slip of oil price, the most crucial sector of Norway’s economy. However, the GDP does not include crude oil in its leading industry, but it still has a significant impact.
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