The Executive Board of the International Monetary Fund (IMF) has concluded its 2025 Article IV Consultation with Norway, endorsing the staff appraisal using a lapse-of-time procedure. This process allows the Board to approve proposals without formal meetings when there is consensus among members. The Norwegian authorities have agreed to publish the staff report prepared for this consultation, which will be made available on the IMF’s website.
Norway’s economy has shown resilience despite global challenges and tight financial conditions. In 2024, GDP grew by 2.1 percent, mainly due to high natural gas extraction, while mainland GDP increased by 0.6 percent, supported by public spending. Employment and hours worked also rose, though unemployment reached 4 percent. Projections indicate that mainland GDP will grow by 1.5 percent in 2025 as financial conditions ease, fiscal policy remains expansionary, and real incomes recover.
Inflation in Norway has been declining but is still above the central bank’s target of 2 percent. Services inflation and wage growth continue to contribute to price pressures. Norges Bank began normalizing monetary policy in June 2025 by lowering its policy rate by 25 basis points to 4.25 percent and signaled further reductions ahead.
The government’s fiscal stance has become more expansionary with the introduction of the 2025 budget, providing a significant fiscal impulse. The structural non-oil deficit is projected at about 13 percent of trend mainland GDP, while withdrawals from the Government Pension Fund Global remain below the established guideline of three percent. The government also plans to gradually increase defense spending toward five percent of GDP in line with NATO targets.
Despite these positive indicators, risks remain for Norway’s economic outlook. These include potential impacts from global trade tensions, elevated household debt levels, and demographic as well as structural challenges over the long term.
The IMF Executive Directors noted that “Norway’s economy is resilient owing to strong fundamentals that place it well to navigate a highly uncertain external environment.” They expect fiscal support and recovering private demand to drive mainland real GDP growth to around its long-term potential in 2025 and maintain that level over the medium term.
They also stated: “Bringing inflation sustainably back to target remains the most pressing near-term policy priority.” Directors advised Norges Bank to proceed cautiously with monetary policy normalization and keep a restrictive stance until inflation clearly trends toward target levels.
On macroprudential policies, Directors recommended against further easing until systemic risks subside or financial disintermediation risks appear: “Although household debt burdens have stabilized, they remain high and the recent relaxation of the LTV limit for mortgages could increase financial vulnerabilities further by fueling increases in house prices and household indebtedness.”
The financial system was described as sound but still facing vulnerabilities: “Continued close monitoring of the financial system is essential,” with an emphasis on preserving capital buffers and strengthening contingency planning amid pressure on commercial real estate.
Directors suggested that adopting a broadly neutral fiscal stance would help support disinflation efforts: “A neutral fiscal position would enhance the effectiveness of the overall policy mix,” possibly requiring offsetting new spending priorities with savings elsewhere.
To ensure continued strong economic outcomes, enhancements were recommended for Norway’s fiscal framework—such as reinforcing countercyclicality in fiscal policy and introducing explicit medium-term expenditure limits—to reduce exposure to market-driven volatility from changes in GPFG value.
Advancing tax reforms aimed at improving efficiency was highlighted as essential for long-term resilience: “Tax reforms aimed at improving efficiency and broadening the revenue base remain a priority.” Further measures were urged for disability benefit reform along past IMF recommendations to increase labor force participation and contain long-term costs.
Directors called for an ambitious reform agenda targeting productivity growth: “Advancing the ‘reinforced work line’ agenda would reduce reliance on disability benefits... Strengthening education-to-work transitions...and accelerating digitalization would further support productivity.”
The next Article IV consultation between Norway and IMF is expected within twelve months under standard procedures.
Norway's population stood at approximately 5.6 million in 2024 with per capita GDP reaching US$86,611 according to official sources. Major exports include oil, natural gas, and fish such as salmon.