OECD Economic Surveys : Norway 1969.

63 Pages·3.641 MB·English

by  OECD

BANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ANISATION OE COOPERATION ET DE D t V E L 0 P P E M E N T ECONOMIQUES
BASIC STATISTICS OF NORWAY
THE LAND
Area(1 000sq. km) 324 Majorcities(January 1968):
Arabicarea(1 000sq. km) 10 Oslo 484300
Productiveforest(1 000sq.km.) 70 Bergen 116800
THE PEOPLE
Population(Jan. 1968) 3802000 Labourforcetotal, 1967 (man years) 1 552500
No.ofinhabitantspersq.km 12 Of which, in agriculture, forestry
Netnatural increaseannualrate andfishing 278200
(average 1960-1967) 29500 Netannualmigration(average1960-
Per I 000inhabitants(average 8.0 1967)
1960-1967)
PRODUCTION
GrossNationalProduct in 1968(mil¬ Grossfixedcapitalformation(1968):
lionsofKr.OECDdefinition) 64434 PercentageoftheGNP 26
GNPperhead(S) 2350 Perhead,S 626
THE GOVERNMENT
Publicconsumption in 1968 (percentageof CompositionofParliament(No.ofofscats):
GNP) 18 Labourparty 68
General government current revenue in Conservativeparty 31
1967(percentageofGNP) 34 Centre(Agrarian)party 18
Publicgrossfixedcapitalformation in 1967 Liberalparly 18
(percentageofGNP) 10 ChristianDemocrats 13
Left-wingSocialist partv 2
150
Lastgeneralelections: 1965. Nextgeneralelection; 1969.
LIVING STANDARDS
Average hourly earnings of male indus¬ No. of telephones per 1 000 inhabitants
trialworkersin 1968(inkroner) 11.22 (Dec. 1967) 260
No. ofpassengercars in use per 1,000in¬ No,ofradiolicencesper I000inhabitants
habitants(Dec. 1967) 150 (Dec. 1967) 295
No.oftelevisionlicenceper 1 000inhabi¬
tants(Dec. 1967) 174
FOREIGN TRADE
Exports: Imports:
Exportsofgoods and servicesasa percen¬ Importsofgoodsand servicesasa percen¬
tageofGNP(average 1960-1967) 37 tageofGNP(average 1960-1967) 38
Ofwhich: Main imports in 1967 (percentage oftotal
Grossfreightearnings 15 commodityimports):
Main exports in 1967 (percentage oftotal Ships(average 1960-1967) 12
commodityexports): Machinery,apparatusandtransportequip¬
Forestryproducts 14 ment(cxcl.ships) 28
Base metals and products thereof 26 Rawmaterials(non-edible)incl.fuelsand
Fishandfishproducts 9 chemicals 22
Machinery,apparatusand transportequip¬ Basemetalsandproductsthereof 12
ment(cxcl.ships) 12
THE CURRENCY
Monetaryunit:Krone. CurrencyunitperS 7.14
OECD ECONOMIC SURVEYS
NORWAY
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
The Organisation for Economic Co-operation and
Development wasset up undera Conventionsignedin Parison
14thDecember1960bytheMembercountriesofthe Organisa¬
tion for European Economic Co-operation and by Canada
and the United States. This Convention provides that the
OECD shallpromote policies designed:
to achieve the highest sustainable economic growth
and employment and a rising standard of living in
Member countries, while maintaining financial
stability, andthus to contribute to the development of
the world economy;
to contribute to soundeconomic expansion in Member
as well as non-member countries in the process of
economic development;
to contribute to the expansion of world trade on a
multilateral, non-discriminatory basis in accordance
with international obligations.
The legalpersonality possessed by the Organisationfor
European Economic Co-operation continues in the OECD,
which cameintobeingon30th September 1961.
The members ofOECD are: Austria, Belgium, Canada,
Denmark, Finland, France, the FederalRepublic ofGermany,
Greece, Iceland, Ireland, Italy, Japan, Luxembourg, the
Netherlands, Norway, Portugal, Spain, Sweden, Switzerland,
Turkey, the United Kingdom and the United States.
The SocialistFederalRepublicofYugoslaviaisassociated
incertain workofthe OECD,particularly thatoftheEconomic
andDevelopment Review Committee.
The annual review of Norway by the OECD
Economic and Development Review Committee took place
on 19th June 1969. The present Survey has been
updated subsequently
CONTENTS
Introduction
I Recent Trends 6
Demand 6
Production and Employment 9
Incomes and Prices 11
Balance ofPayments 13
II Economic Policy 18
Fiscal Policy 18
Monetary Policy and Developments 19
The Tax Reform 23
m Prospects 26
1969-Trends and Prospects 26
The Long-Term Programme 1970-1973 29
The Outcome ofthe 1966-1969 Programme 29
Growth in 1970-1973 30
The Balance ofPayments 31
Policies 33
IV Conclusions 34
TABLES
1 Supply and Use ofResources 6
2 Gross Fixed Asset Formation by Sectors 7
3 Analysis ofthe Growth ofGDP 8
4 Production and Employment by Sectors 10
5 Development and Distribution ofFactor Incomes 11
6 Development ofWages 12
7 Balance ofPayments for the Shipping Sector 14
8 Trends in Exports 15
9 Trends in Imports 16
10 Global Balance ofPayments 17
11 Central Government Budget 19
12 The Credit Market 20
13 Developments in Primary Liquidity 22
14 Estimated Gross Income ofthe Public Sector in 1970 24
15 Estimated Changes in Public Revenue and Expenditure from the
Tax Reform 25
16 Prospects for Demand and GDP in 1969 27
17 The Long-Term Programme 1966-1969 Compared with Estimated
Outcome 30
18 Demand and Output, 1961 to 1973 32
19 Balance ofPayments, 1968 and 1973 32
20 Bond Issues on the Capital Market 34
Statistical annex
A Supply and Use ofResources (Current prices) 39
B Supply and Use ofResources (1963 prices) 40
C Gross National Product by Industrial Origin (Current prices) 41
D Gross National Product by Industrial Origin (1963 prices) 42
E Gross Fixed Asset Formation (1963 prices) 43
F Central Government Income and Expenditure 44
G Balance ofPayments (US $ million) 45
H Balance ofPayments (Quarterly, Kr. million) 46
I Quarterly National Accounts 47
J Labour Market and Employment 48
K Production and Demand by Sector 49
L Foreign Trade, Total and by Area 52
M Imports: Volume, Prices and Commodity Breakdown 53
N Exports: Volume, Prices and Commodity Breakdown 54
O Prices and Wages 55
P Money and Credit 56
DIAGRAMS
1 Trends in Unit Labour Cost 13
2 Prices in Foreign Trade 16
INTRODUCTION
After five successive years offast growth leading to increasing demand
pressures, thepressure was eased in 1968 followed bysome slowdown in the
growth of output. The slower growth was mainly caused by a decline in
business fixed investment, but was reinforced by a reduction of working
hours and a failure ofthe winter herring catches. Some slack developed in
certain industries and the labour market became less tight than earlier;
nevertheless, the relatively strong rise in costs seems to have continued.
The current external account improved significantly, and changed to show
a large surplus for the first time in the last decade. The major part ofthe
improvementcanbe ascribedtotheshippingsector higherfreightearnings
and a sharp fall in net imports of ships but the trade balance (excluding
ships) also improved, reflecting notably the easing of demand pressures.
The first months of 1969 have seen a recovery ofdomestic demand for
consumer and investment goods and a faster growth of production. The
authorities expecta4percentincreasein outputfrom 1968 to 1969, roughly
in line with the growth ofcapacity which also this year will be limited by
the shortening of the working week. A continued strong fall in imports
ofships should result in some further improvement ofthe current external
account. Buttherise in labourcosts may remain strong.
The government has published a programme for the period 1970-73.
Annual growth of GDP is estimated at 4.5 per cent, slightly less than the
outcome for the 1960's. Merchandise exports and fixed asset formation
are expected to remain the major growth factors, and the labour market is
likely to remain tight. The current external account is expected to show
only a small deficit, and with foreign reserves at a fairly comfortable level,
the authorities do not envisage further long-term borrowing of any con¬
siderable size. Acomprehensivetax reform, with some change in emphasis
from directto indirecttaxation, is approved by Parliament andwill become
effective as from 1stJanuary 1970.
OECDEconomicSurveys
I RECENT TRENDS
Demand
In 1968 the gross domestic product increased by 3.8 per cent in real
terms, somewhat less than earlier; in the five-year period 1963-1967 the
annual rate of growth had averaged 5.2 per cent, culminating with 5.8 per
cent in 1967. During the last two years production trends have differed
appreciably from the general pattern in Western Europe; in 1967 the rise
in outputwasfaster, andin 1968 weaker, than in OECD-Europe.
The slowdown inthegrowth ofoutputin 1968 may betraced to factors
both on the production and the demand side. Production in the fisheries
and some related industries fell due to small herring catches, and output in
forestry was reduced owing to lower timber prices. The lower production
in theseprimaryindustriesmayhavereducedthegrowthrate oftotal output
by about one-half of one percentage point. Moreover, a reduction of the
contractual working week as from 1st July 1968, may have reduced the
growth rate by another half of one percentage point. However, the main
reasonfortheslowergrowth andanewfeatureintheeconomicsituation
was the fact that the strong upward trend in fixed asset formation was
reversed.
Table 1 SupplyandUseofResources
Percentagechangefrom previous year(1961 prices).
1965 1966 1967 1968
Privateconsumption 3.5 4.4 4.8 3.6
Publicconsumption 8.0 2.2 8.5 6.5
Grossfixed assetformation 6.2 6.2 11.6
Changein stocks1 1.5 1.5 0.7 0.2
DomesticDemand 6.2 4.9 7.0
Exports 6.8 6.9 10.5 10.2
Goods(excludingships) 5.5 8.8 6.6 12.4
Ships 29.4 74.1 23.1
Grossfreightearnings 8.6 5.8 10.2 7.2
Otherservices 0.1 17.7 9.9 5.0
Imports 9.1 7.8 12.5
Goods(excludingships) 8.4 11.6 9.0 6.6
Ships 20.4 45.9 -^10.2
Shippingexpenses abroad 7.8 7.8 2.3 5.8
Otherservices 1.7 19.9 13.5 2.8
GrossDomesticProduct 5.2 4.4 5.8 3.8
1 PercentofGDP.
Sources: EconomicSurvey, 1968,andRevisedNationalBudgetfor1969.
Norway
Tables 1 and 2 show that gross fixed asset formation in 1968 fell by
8.6 per cent in volume. Much ofthe decline was related to investment in
ships and boats, which have little impact on domestic activity. Other busi¬
ness investment fell by 3.6 per cent following an increase of6.8 per cent in
the preceding year. Investment in mining and manufacturing decreased
by 9.4 per cent and in electricity supply by 3.3 per cent, whereas investment
in agriculture, transportation (excluding shipping) and several service
sectors rose rather fast. The weakening of industrial investment demand
had been felt already towards the end of 1967, partly reflectingthe termina¬
tion of several large industrial projects. But other factors contributed.
Profit margins have narrowed because of increased social premiums after
the introduction ofthe National Insurance Scheme from 1st January 1967,
andprofitabilityincertainsectorsmayhavebeenreducedbecauseofstronger
international competition. Moreover, there may have been difficulties in
financing certain industrial investment projects over the bond market.
Nevertheless, industrial investment in 1968 was higher than in 1966 and
still rather high by international standards. Public investment and invest¬
ment in residential construction also rose more slowly in 1968 than in the
preceding year. Investment in ships usually shows large variations from
one year to another. The marked decline in 1968 was dueto the exception¬
ally few orders placed in 1966 and 1967 and to large exports ofold and less
profitable ships.
Table 2 GrossFixedAssetFormation by Sectors
Percentagechangein volumefrompreviousyear(1961 prices)
1965 1966 1967 1968
Agricultureandforestry 6.9 1.2 7.1
Fishingand whaling 19.0 21.3
Miningand manufacturing 3.5 13.7 9.8
Buildingand construction 17.1 6.3 7.3 1.9
Dwellings 4.0 5.9 15.9 3.0
Maritimetransport 16.7 1.1 20.6
Othertransportation 2.9 5.6 3.5 6.2
Electricand gasworks
Investment forpublicconsumption 0.0 4.6 12.6 6.6
Othersectors 7.0 12.1 10.3 2.6
Total 6.2 6.2 11.6
Ofthis:
Buildingandconstruction 1.9 4.9 10.0 1.4
Machineryandtransportequipment 4.0 11.6 7.1
Shipsand boats 17.0 2.2 19.7
Sources: EconomicSurvey1968andRevisedNationalBudgetfor1969,
OECDEconomicSurveys
Table3 AnalysisoftheGrowthofGDP
Changesin volume(1961 prices) from previousyearinpercent ofGDP, including
estimated multipliereffects
1966 1967 1968
Autonomousdemandcomponents 3.5 1.6 1.7
Export ofgoodsexcludingships 1.8 1.4 2.6
Businessinvestmentsexcludingships 1.6 0.9
Inventoryaccumulation 0.1
Policy-determineddemandcomponents 1.0 3.0 1.6
Central government expenditure on goods and services 0.4 0.7 0.7
Local government expenditure on goods and services 0.2 1.3 0.7
Investment in dwellings 0.4 1.0 0.2
Directcontributionfrom theshippingsector 0.9 1.2 1.0
Residual1
Actualchangein GDP 4.4 5.8 3.8
1 Actual changein GDP lessthetotal estimated impact ofautonomous and policy-determined com¬
ponentsanddirectcontributionfromtheshippingsector.Theresidualmaypartlybeascribedtoshort-term
irregularitiesinthepropensitytoconsumeandimport.
Source: Secretariatestimates.
Table 1 shows that public and private consumption also rose less fast
in 1968 than in the previous year, and stockbuilding was weaker. Total
domestic demand declined by 1.5 per cent in volume; excluding investment
in ships, domestic demand rose somewhat (2.1 per cent) but much more
slowly than the growth in output.
Exports ofgoods and services, increasing by more than 10 per cent in
real terms, constituted the main expansionary demand element in 1968.
There was a particularly sharp increase in merchandise exports (excluding
ships) (12.4 per cent in volume). Exports of shipping services remained
strong (7.6 per cent) following the record rise of more than 10 per cent in
the year before. The advance in exports ofotherserviceswasmore moderate
(5 per cent). The large increase in ship exports was mainly composed of
second-hand tonnage, but deliveries to abroad ofnew ships also rose some¬
what from the high level reached in 1967.
The breakdown of demand components in Table 3 is similar to that
shown in last year's economic survey ofNorway (Table 2). It distinguishes
between autonomous demand components (merchandise exports excluding
ships, business investment excluding ships and stockbuilding) and policy-
determined components (public expenditure on goods and services and
residential construction). The estimated impact on domestic activity of
changes in these components given in Table 3 takes account of secondary
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