Norway

Leaders

King Harald V
Prime Minister Erna Solberg

Background

Two centuries of Viking raids into Europe tapered off following the adoption of Christianity by King Olav TRYGGVASON in 994; conversion of the Norwegian kingdom occurred over the next several decades. In 1397, Norway was absorbed into a union with Denmark that lasted more than four centuries. In 1814, Norwegians resisted the cession of their country to Sweden and adopted a new constitution. Sweden then invaded Norway but agreed to let Norway keep its constitution in return for accepting the union under a Swedish king. Rising nationalism throughout the 19th century led to a 1905 referendum granting Norway independence. Although Norway remained neutral in World War I, it suffered heavy losses to its shipping. Norway proclaimed its neutrality at the outset of World War II, but was nonetheless occupied for five years by Nazi Germany (1940-45). In 1949, Norway abandoned neutrality and became a member of NATO. Discovery of oil and gas in adjacent waters in the late 1960s boosted Norway's economic fortunes. In referenda held in 1972 and 1994, Norway rejected joining the EU. Key domestic issues include immigration and integration of ethnic minorities, maintaining the country's extensive social safety net with an aging population, and preserving economic competitiveness.

Economy

Norway has a stable economy with a vibrant private sector, a large state sector, and an extensive social safety net. Norway opted out of the EU during a referendum in November 1994; nonetheless, as a member of the European Economic Area, it contributes sizably to the EU budget.The country is richly endowed with natural resources in addition to oil and gas, including hydropower, fish, forests, and minerals. Norway is a leading producer and the world’s second largest exporter of seafood, after China. The government manages the country’s petroleum resources through extensive regulation. The petroleum sector provides about 9% of jobs, 12% of GDP, 13% of the state’s revenue, and 37% of exports, according to official national estimates. Norway is one of the world's leading petroleum exporters, though oil production in 2016 was close to 50% below its peak in 2000; annual gas production, conversely, more than doubled over the same time period. After a continual decline from 2001 to 2013, oil production rose in 2016 for the third year running, due to the higher production of existing oil fields and to new fields coming on stream.In anticipation of eventual declines in oil and gas production, Norway saves state revenue from petroleum sector activities in the world's largest sovereign wealth fund, valued at almost $900 billion as of early 2017. To help balance the federal budget each year, the government follows a “fiscal rule,” which states that spending of revenues from petroleum and fund investments shall correspond to the expected real rate of return on the fund, an amount it estimates is sustainable over time. In February 2017, the government revised the expected rate of return for the fund downward from 4% to 3%.After solid GDP growth in the 2004-07 period, the economy slowed in 2008, and contracted in 2009, before returning to modest, positive growth from 2010 to 2016. Lower oil prices in 2015 and 2016 caused growth to slow, increased unemployment, and weakened the Norwegian krone. The latter trend has mitigated the negative impact of lower oil and gas prices by making Norwegian exports cheaper for foreign buyers. The government has expressed willingness to increase public spending from the sovereign wealth fund to help prevent a recession.

GDP

371 Billion