International Trade in Norway

News Related to International Trade in Norway

Business outline for Norway

Main Industry Sectors

Agriculture contributes to about 2%  of the GNP. Fishing is a very important activity, Norway is one of the biggest exporters of fish in the world. Government subsidies for agriculture are very considerable.

Norway's economy is essentially based upon the exploitation of its natural and energy resources  (oil, gas, hydroelectric power, forests and minerals).  Oil production dominates the economy, accounting for nearly a quarter of the GNP. Norway is also a major producer and exporter of natural gas.  There is a consensus among the political parties to save oil and gas revenues for future generations, to the point where Norway has one of the largest sovereign wealth funds in the world.  Shipbuilding, metals, pulp and paper, chemical industries, machinery and electrical equipment are Norway's main manufacturing industries. Norway has one of the biggest and most modern fleet in the world. 

The services sector is highly developed and accounts for more than three-fourths of the GNP.

Economic Overview

After fifteen years of a strong growth (more than 5% in average annually), Norway has been touched by the global economy recession; however, the decline in production was less severe than in other countries.  In 2009, the growth was slightly negative (-1.4%), a limited contraction by the rebound of oil prices.  The growth rate has slightly increased in 2010, stimulated by the relaunching measures, household consumption and private investment.  This slow revival trend should continue in 2011. 

Even though, Norway strongly depends of oil prices, the Norwegian economy is very solid and its perspectives are positive.  The government has progressively suppressed the exceptional measures taken during the crisis in order to prevent overheating its economy.  As it was announced on the budget 2011, the priority is to reduce the public deficit (without including oil). Confronting a long-term challenge, which is the ageing of the population, the government has also introduced a reform on the retirement insurance system. 

Norway is a rich country, which has the second highest GNP per capita in the world (USD 55,600 in terms equivalent to purchasing power).  The country also ranks second place in the UNDP's Human Development Index. Contrary to the initial fears, unemployment was controlled during the crisis and it has been stable at a very low rate (3.5% of the active population).

FDI in Figures

Norway encourages foreign investment and the investment climate is very positive. Even though foreign investment flows froze under the effect of the global recession, they should start to increase again with the revival.  Another major reason for which the country has lost some of its appeal is that the government owns a significant share in the oil industry.  Nevertheless, American and Dutch oil companies (Exxon-Mobil, Texaco, Royal Dutch Shell) have made important investments in Norway.  In general, the most attractive industries for FDI are oil, gas, manufacturing, the retail  and wholesale sectors and  banking.  Even though Norway's domestic market is very narrow, the country has many assets such as its location in the core of a flourishing area, its privileged ties with the United States, its population is high-qualified and multilingual, its economy is top-modern as well as its energy resources.

FDI Government Measures

The government maintains an open position towards foreign investment in Norway. Norway offers no significant tax incentives for investors (whether foreign or domestic). Some benefits such as lower social security payments, lower tax rates and extra deductions for individuals, apply to investments made in the less populated areas in the north of Norway. Some existing regulations, standards and practices may marginally favor Norwegian, Scandinavian or EEA investors.

Innovation Norway is a government agency designed to assist businesses by offering financing through Norwegian Industrial and Research Development Contracts.

Special restrictions apply in the following sectors:
- Acquisition of waterfalls, power supply rights and mining rights;
- Acquisition of land, real estate and long term leases;
- Acquisition of farmland and forests;
- The purchase of over 10 % of the capital stock of a Norwegian financial institution;
- Direct investments in petroleum exploration and exploitation are subject to a government license.

Regarding the financial crisis, fiscal policy has been very strong so far. However, because of the the losses suffered by the pension fund in 2009, the government remains cautious.

Country Strong Points

Norway has a very strong economy and positive prospects. The country is a world leader in information, with a both stable and transparent political environment. Norway has a well organized public sector and quality infrastructures. The population enjoys a high purchasing power and the business environment is stable and investments on the increase (even though dominated by the energy sector). Norway has a highly skilled labor force, which means there is great growth potential in services and knowledge based industries, such as information and communications technologies.
The best business opportunities are consumer goods, information and communications technologies, construction and corporate services.
Numerous contracts are awarded in Norwegian oil and gas projects. The domestic market is limited, but Norway can be an attractive business base for market operations in the Nordic countries, Baltic countries and Western Russia.

Country Weak Points

Norway's economy is dependent on the price of oil. Norway is already past the peak of its oil production.
The fact of the geographical isolation of some parts of the country, the expenses in the areas of transport, logistics, and telecommunication infrastructures are very high.
Lastly, the country has implemented relatively strict laws in the area of employment. The country also has extremely high salary costs.

Foreign Trade Overview

Norway has a widely open economy, trade represents almost 75% of the GDP (during the period 2007-2009). 

Traditionally, the country exports energy-intensive products and imports technology-intensive products. Its main trade partners are the countries of the European Union. 

The country is the third largest exporter of oil in the world, the largest supplier of natural gas to the the countries of  Western Europe, the largest exporter of fish in the world.  Overall, Norway is classified among the 30 largest exporters of the world.  The industrial products (ships, oil platforms, etc.) constitute nearly 10% of total exports.  Norway mainly imports manufactured merchandise (machines, transporters, information technology) which accounts for 40% of its total imports. 

The surplus in the trade balance is enormous.  The country's trade balance is structurally positive and this trend should continue during the next following years.