Norway WT/TPR/S/138 
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I. ECONOMIC ENVIRONMENT 
(1) MAJOR FEATURES OF THE ECONOMY  
1. Norway has a mainland territory of about 324,000 square kilometres and a population of some 
4.55 million.  Located in north-western Europe, an d bordered by Finland, Sweden, and Russia,  
Norway has one of the highest standards of livi ng in the world;  it ranks number one in UNDP's 
human development index, with a per capita GDP of  about NKr 336,000 in 2003, equivalent to some 
US$42,040. 
2. Since the 1970s, the production of petroleum in  the North Sea has been of considerable 
importance for the Norwegian economy.  Oil and ga s extraction accounted for more than 17% of GDP 
in 2003, and fuel products, notably crude petroleum a nd natural gas, accounted for more than 60% of 
Norway's merchandise exports;  the country is the wo rld's third largest exporter of oil.  Norway has 
been saving its oil-boosted budget surpluses in a Stat e Petroleum Fund (SPF), which invests in foreign 
bonds and other securities;  at end-2003, it was valued at more than NKr 845 billion.1  The SPF is 
intended as a reserve for future expenditures and is not earmarked for any special purpose.  It helps 
Norway to weather fluctuations in the oil subsector , to contain public expend iture, and to limit money 
supply to the economy.  The SPF thus also has a bear ing on exchange rate policy (Box I.1).  While the 
Government still makes use of the fund to spread th e benefits of petroleum surpluses over time, it has 
begun a policy of phasing in some of revenue from the Fund into current expenditure.   
3. The volatility of the petroleum sector's share in  GDP, caused mainly by sharp price variations, 
has led to fluctuations in the GDP shares of th e different economic activities.  The services sector 
constitutes the backbone of Norway's economy, with a GDP share of more than 56%;  most services 
activities have increased their contribution to GDP si nce 2000.  In broad terms, agriculture, forestry 
and fishing have continued their downward trend since Norway's last TPR in 2000 and together 
contributed just over 1% to GDP in 2003, while  manufacturing has oscillated around a relatively 
stable average GDP share of about 9%. 
4. In addition to monetary, credit, and foreign exchange policy, the Central Bank of Norway 
(Norges Bank) is responsible for the operational management of the State Petroleum Fund and for 
issuing regulations and monitoring activities re garding financial institutions and markets.2  T h e  
Executive Board, the Central Bank's executive and advisory body, compris es seven members, all 
appointed by the King.  A Supervisory Council, co mprising fifteen members appointed by Parliament, 
ensures that the rules governing the Bank's activities are observed, and supervises its operations.  The 
national currency is the Norwegian krone (NKr).  Norway accepted Article VIII of the IMF 
Agreement on 11 May 1965.  It currently has a floating system, with no pre-announced path for the exchange rate.  The rate against the euro has ranged between NKr 7.51 and NKr 8.31 since 
January 2001.  As at mid-May 2004, the exchange  rate against the U.S. dollar was NKr 6.85, and 
NKr 8.25 against the euro.
3 
                                                      
1 As at mid-May 2004, the U.S. dollar exchange rate was NKr 6.85. 
2 Act No. 28 of 24 May 1985 relating to Norges Bank and the Monetary System, as amended most 
recently by Act No. 44 of 20 June 2003.   
3 Between 1995 and 2001, the exchange rate of the krone against the U.S. dollar was characterized by a 
depreciating trend, while between mid-2001 and May 2004 the krone appreciated by ab out 25%.  Norway's real 
effective exchange rate appreciate d strongly between 1998 and 2002. WT/TPR/S/138 Trade Policy Review 
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Box I.1:  The State Petroleum Fu nd and the Environmental Fund 
The Parliament adopted the Act relating to the State Petroleum Fund in 1990.  The Ministry of Finance is 
responsible for defining the strategy of the Fund, but has delegated the task of its operational management to 
the Central Bank.  According to the Management Agr eement between the Ministry and the Central Bank, the 
Fund shall be safely managed based on the objec tive of high return subject to moderate risk.  
The Fund, which is a krone-denominated account with the Central Bank, has two main objectives:  (i) to act 
as a buffer for government finances in that the governme nt budget surplus is transf erred to the Fund, whereas 
a deficit is covered by drawing on the Fund;  and (ii) to serve as a tool for managing future financial 
requirements arising from increasing pension outlays accompanied by declining petroleum earnings. 
The surplus on central gov ernment accounts is saved in the Fund.  Th e first transfer to it, corresponding to 
the 1995 surplus, occurred on 31 May 1996, and further capital has been transferred annually since.  While Fund capital was initially invested only in fixed income securities, investment in equities was introduced in 
January 1998 and was set to 40% of asset allocation.  
The entire capital of the Fund is invested abroad, in line with three main considerations:  (i) the need to 
maintain the ordinary fiscal budget as the central political management tool – the authorities indicated that 
using the Fund for financing domestic investment would result in a weakening of the budget process, in 
which the Fund would become a mere supplementary source of financing public expenditure;  (ii) the need for a diversified industry structure – the optimal level of domestic fixed investment should not be affected by 
the size of petroleum revenues in a given year.  Increased domestic investment would carry the risk of lower 
return and could result in an industry structure that cannot be sustained once oil revenues start to decline;  and (iii) the need to stabilize the Norwegian economy – investing the petroleum revenues directly abroad 
contributes to the capital outflow ne eded to match current account surplu ses and dampens the pressure for a 
stronger exchange rate, thereby avoiding the so-called "Dutch disease" (a phenomenon, first observed in the Netherlands after the discovery of North Sea gas, and referring to the deindustrialization of an economy 
when a natural resource or artificial influx of cash lead s to an appreciation of the country's currency, making 
manufactured goods less competitive and increasing imports and decreasing exports). 
The market value of the Petroleum Fund at 31 December 2003 was NKr 845.3 billion, up from 
NKr 222 billion at end 1999, and above the projected end-2003 value of NKr 665 billion in the National 
Budget for 2000.  The return on the Fund in 2003 was 12.6% (measured in international currency), the 
Fund’s highest return ever.  The Fund is by far the largest portfolio managed in Norway and among the 
largest funds in the world.  Projections indicate th at the Fund will have grown from about 54% of GDP 
today to about 90% by the end of 2010.   
In addition to the Petroleum Fund, an Environmental Fund was established in January 2001 with a starting 
capital of NKr 1 billion.  Its assets are to be invested  only in companies that satisfy certain environmental 
criteria.  
Source:    Ministry of Finance (2003), The Norwegian Government Petroleum Fund ;  Central Bank (2004),  
The Government Petroleum Fund, Annual Report 2003 . 
5. Norway generally records low inflation and unemployment rates (despite relatively high 
growth in labour costs of around 5.7% on averag e over 2000-03), sinking interest rates, and strong 
current account surpluses.  As in previous years, Norway has continued to provide substantial direct 
aid to developing countries (some 0.9% of its GDP). 
(2) RECENT ECONOMIC DEVELOPMENTS  
6. Since Norway's last TPR, its output growth has slowed continuously, from 2.8% in 2000 to 
0.4% in 2003, and unemployment has increased, from 3.4% in 2000 to 4.5% in 2003 (Table I.1).  This 
was the result of continued falls in gross fixe d capital formation since 1999, compounded with the 
slowdown in the world economy in recent years and the related decline in world demand.  Factors that 
contributed to the fall in gross fixed capital fo rmation include the sharp decline in petroleum 
investments between 1998 and 2002, an overshoot in office building construction at the end of the Norway WT/TPR/S/138 
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1990s with resulting surplus capacity, and the streng thening of the krone until 2002, combined with 
excessive wage growth. 
Table I.1  
Basic macroeconomic indicators, 1998-03  
(Year to year percentage cha nge, unless otherwise specified) 
  1998 1999 2000 2001 2002 2003a 
Gross domestic product (annual percentage change in volume)             
Gross domestic product  2.6 2.1 2.8 2.7 1.4 0.4 
Petroleum activities and ocean transport  -3.8 -1.7 4.6 4.6 0.4 -0.3 
Mainland Norway (market prices) 4.1 2.7 2.5 2.1 1.7 0.6 
Final consumption expenditure 2.8 3.2 3.1 3.0 3.4 3.0 
   Households final consumption expenditure 2.8 3.3 4.0 1.9 3.5 3.5 
   Consumption expenditure of non-profit institutions serving households 0.4 3.1 1.7 -1.1 7.0 9.0 
   Government consumption expenditure 3.3 3.2 1.3 5.8 3.1 1.4 
Gross fixed capital formation (total) 13.1 -5.6 -3.6 -0.7 -3.4 -3.7 
   Gross fixed capital formation (mainland) 8.6 -0.1 -1.2 4.3 -2.5 -4.7 
   Gross fixed capital formation (petroleum activities and ocean transport) .. -16.3 -8.9 -1.3 -5.8 -0.9 
Final demand from mainland Norway 3.9 2.6 2.3 3.2 2.4 1.7 
Exports of goods and services 0.6 2.8 4.0 5.0 0.1 1.2 
   Traditional goods 5.4 2.2 5.1 1.5 1.6 2.6 
   Crude oil and natural gas -5.8 0.4 4.1 8.8 2.2 -0.2 
   Ships, oil platforms and aircraft -15.3 48.4 -45.6 62.5 -24.2 35.7 
   Services 5.5 1.8 9.3 -2.2 -3.1 -0.5 
Imports of goods and services 8.5 -1.8 2.7 0.9 2.3 2.2 
   Traditional goods 9.0 -1.9 3.8 3.6 3.8 4.0 
   Crude oil and natural gas -1.5 17.0 -28.5 -16.6 -21.3 10.6 
   Ships, oil platforms and aircraft 14.8 -18.7 -0.7 -37.7 -9.6 -15.5 
   Services 5.8 2.8 1.9 4.1 1.1 0.20 
Household savings rate (% personal income)        
Employment, wages and prices (annual percentage change)        
Unemployment (% labour force) 3.2 3.2 3.4 3.5 3.9 4.5 
Wage index .. .. 5.7 6.4 6.3 4.3 
Consumer price index 2.3 2.3 3.1 3.0 1.3 2.5 
External sector        
External current account (% GDP) 0.0 5.4 15.6 15.4 12.9 12.9 
International reserves (in months of imports of goods and services) 4.1 4.8 5.2 4.1 4.4 .. 
Net foreign assets (% of GDP) 17.8 25.0 31.4 38.6 35.5 .. 
State Petroleum Fund (NKr) .. .. .. .. .. .. 
General government finance        
General government balance (% of GDP) 3.5 6.1 15.1 15.0 12.5 10.0 
Central government balance before transfers to the State Petroleum Fund 
(% GDP)  .. .. .. .. .. .. 
Net transfers to the State Petr oleum Fund (% GDP) .. .. .. .. .. .. 
Money and interest rates       
Broad money, M2 (end of period) 4.6 10.7 9.2 8.7 7.5 2.1 
Three-month  interbank rate (%, per annum) 5.8 6.5 6.8 7.2 6.9 4.1 
Lending rate (% per annum) 7.9 8.2 8.2 8.9 8.5 .. 
Exchange rate         
Nominal exchange rate (NKr per US$, annual average) 7.5 7.8 8.8 9.0 8.0 .. 
Real effective exchange rate (1995 = 100, annual average) 108.1 113.3 115.5 122.0 136.6 136.3 
.. Not available. 
a Provisional. 
Source : Statistics Norway (2003), Statistical Yearbook of Norway ; IMF (2003), International Financial Statistics , 
 November;  and Statistics Norway  online information.  Available at:  http://www. ssb.no/english/subjects/ 
 08/05/kt_en/. 
7. Awareness of the economic slowdown has led to  the adoption of the Long-Term Programme 
for 2002-05 (White Paper No. 30 to the Parliame nt), aimed at sustainable economic stability and 
efficient use of resources.  Structural reforms, priv atization of public enterprises in particular, have 
reduced State ownership, which, nevertheless, remains high by OECD countries standards WT/TPR/S/138 Trade Policy Review 
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(Chapter III(4)(iv)).  The Norwegian economy has st arted to recover since the second half of 2003, 
fuelled by low interest rates and accelerating world demand.   
8. The effect of population aging on pension an d health-care spending is Norway's dominant 
long-term fiscal issue.  In the National Budget for 2004, it was estimated that the present value of 
central government commitments in the form  of accumulated pensions amounted to 
NKr 3,700 billion, or over four times greater than the State Petrol Fund's capital.  Thus, future increases in pension payments are an important reas on for the Government to seek a high savings rate 
by putting aside petroleum revenues in the SPF.  New fiscal policy guidelines were set in March 2001 
to further contain the non-oil budget deficit and transfers from the SPF.
4  The fiscal guidelines 
establish that the use of petroleum revenues over the Government budget shall over time correspond 
to the expected real return on the SPF, estimated at 4%.  In January 2004, the Pensions Committee 
issued its Report on Modernizing the National Insura nce Scheme.  One of the main proposals is that 
pensions shall be related to ove rall lifetime income.  The full realization of the Committee's proposals 
would reduce pension liabilities by some 20% in the long term. 
9. A key objective of the Government's economic po licy is to reduce the overall tax level.  The 
goal is a reduction in taxes by NKr 31 billion duri ng the current parliamentar y term ending in 2005.  
Between 2002 and 2004, reducti ons of NKr 19.5 billion were implemented, through, inter alia , the 
abolition of the investment and aviation passenger taxes in 2002 and successive reductions of income 
taxes.  The 2004 Budget, adopted on 16 November  2003, provides for a moderately expansionary 
stance.  While fiscal revenues are planned to be at the 2003 level, total expenditures are to increase by 
about 5.2%, to NKr 620.5 billion (Table I.2).  The ove rall surplus is expected to amount to 5.8% of 
mainland GDP5, a decrease of 2.8 percentage points over 2003.  The authorities expect the Budget to 
have a broadly neutral effect on the Norwegian economy. 
10. The Central Bank has been successful in keeping inflation rates low (between 1.3% and 3.1% 
on average over the period 1998-03).  Together with  its new fiscal policy guidelines, Norway adopted 
a new monetary policy framework on 29 March 2001,  replacing the previous objective of nominal 
exchange rate stability by low and stable infla tion (measured by the consumer price index).  The 
inflation target is set at 2.5%, approximately th e same as average inflation in Norway since the 
beginning of the 1990s.  The direct effects on consum er prices resulting from cha nges in interest rates, 
taxes, excise duties, and extr aordinary temporary disturbances will not be taken into account.  
Exchange rate stability is also a short and medium-t erm goal, but without specific targets.  The main 
monetary policy instrument remains the key interest  rate, the rate on commerc ial banks’ sight deposits 
(of excess liquidity) with the Central Bank.  The sight deposit rate forms a floor for money market rates.  It was reduced by the Central Bank from 6%-7% in 2002 to 1.75% in May 2004.  Inter-bank 
rates have tended to closely follow the changes in the sight deposit rates.  Commercial banks are at 
liberty to set their own deposit and lending rates.
6   
                                                      
4 Ministry of Finance (2001). 
5 The notion of mainland GDP includ es all industries except offshore activities.  In particular, this 
concept leaves out the oil and gas extraction industry, wh ose output is characterized by sharp price fluctuations 
and, thus, a volatile share in GDP.  Mainland GDP accou nts for about 80% of total output in the Norwegian 
economy. 
6 The key interest rate is set by the Executive Board, which discusses monetary policy in depth every 
six weeks. Norway WT/TPR/S/138 
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Table I.2 
Fiscal budget (including social security) and State Petroleum Fund before loan transactions, 2002-04 
(NKr billion) 
 2002 2003 2004 
Fiscal budget     
  Total revenues  691.1 696.0 696.2 
    Revenues from petr oleum activities 185.3 185.9 164.5 
    Revenues excluding petr oleum activities 505.8 509.1 531.7 
  Total expenditures 584.2 588.1 620.5 
    Expenditures on petr oleum activities 16.1 20.0 21.1 
    Expenditures excluding pe troleum activities  568.2 568.0 599.4 
  Surplus before transfers to the Petroleum Fund 106.8 106.9 75.7 
  - Revenues from petrol eum activities 169.2 165.9 143.5 
  = Non-oil budget balance -62.4 -59.0 -67.8 
  + Transfers from the Petroleum Fund 53.4 59.0 67.8 
  = Fiscal budget surplus  -9.0 0.0 0.0 
State Petroleum Fund     
  Revenues from petrol eum activities 169.2 165.9 143.5 
  - Transfers to the fiscal budget 53.4 59.0 67.8 
  + Dividends on the Petroleum Fund  22.6 29.5 30.2 
  = Surplus in the Petroleum Fund 138.4 136.4 105.9 
Fiscal budget and the Petrol eum Fund surplus 129.4 136.4 105.9 
 
Source:  Information provided by the Norwegian authorities.  
11. A number of institutional reforms to strengthe n monetary policy form ulation and oversight 
were introduced by Norway in 2003.  First, the gove rnor of the Central Bank is to periodically appear 
before the Storting's Standing Committee on Financ ial Affairs for open hearings.  Second, a new 
procedure to choose Executive Board members was instituted.  Candidates are no longer nominated 
by the political parties in the Storting, but are now appointed by the Government on the basis of 
advice from the Ministry of Finance.  Third, system atic outside evaluations of monetary policy have 
been expanded through e.g. the Ministry of Finance's annual Credit Report. 
12. From 1 January 2004, the 1950 Currency Control Act and the 1965 Act authorizing the 
regulation of monetary and credit conditions were re pealed;  both were considered outdated.  At the 
same time, a new section 28 of the Norges Bank Act, concerning protec tive measures, became 
effective through Act No. 44 of 20 June 2003 amen ding the Norges Bank Act.  This section ensures 
that the authorities have a legal basis for regulating capital flows to or from other countries if there is 
a risk of substantial balance-of-payments probl ems or major disturbances in capital markets.  
However, these provisions have not yet been applied. 
13. Norway has pursued its trade liberalization reforms, on a unilateral basis for certain non-
agricultural products, and through its  participation in regional trade agreements;  the scope (product 
coverage and degree of liberaliza tion) of its non-reciprocal trade preferences has been extended 
(Chapter II(5)(ii) and (iii)).  This has somewhat af fected the shares of its trade in agricultural and non-
agricultural products (section (3)).  Despite the slowdown in economic growth, Norway's current 
account has continued to register high surplu ses mainly thanks to oil and gas exports 
(section (3) below);  its international reserves repr esent over four months of  merchandise and services 
imports (Table I.1). WT/TPR/S/138 Trade Policy Review 
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(3) DEVELOPMENTS IN TRADE AND INVESTMENT  
(i) Trade in goods and services 
14. Norway's current account has posted a surplus si nce the beginning of the 1990s, mainly due to 
a strong and generally increasing surplus in merchandise trade.  Since 2000, the current account 
surplus has been particularly high;  it amounted to US$28.6 billion in 2003, equivalent to 12.7% of 
GDP.  This has been mainly from huge increases in goods exports, which rose from US$40.6 billion 
in 1998 to US$68.6 billion in 2003, while imports  of goods have registered a downward trend 
(Table I.3).  Surges in exports have mainly r esulted from increases in petroleum prices.  Crude 
petroleum and natural gas remain Norway's most important export products;  accounting for 38.7% of 
merchandise exports in 1998 and 57.0%  in 2003 (Chart I.1).  In additi on, various other fuel products 
accounted for 5.0% of merchandise exports in 20 03.  Manufactures accounted for 19.6% in 2003, 
down from 29.6% in 1998;  the main items are in the machinery and transport equipment categories 
and chemicals (Table AI.1).  Fi sh products accounted for 4.3% of  merchandise exports in 2003, down 
from more than 7% in 1998. 
Table I.3  
Balance of payments, 1998-03  
(US$ million)  
  1998 1999 2000 2001 2002 2003 
Balance of goods and services 2,845 11,857 28,931 28,969 26,267 30,075 
   Balance of goods 1,686 10,661 25,935 25,840 23,407 26,991 
   Balance of services 1,159 1,196 2,997 3,130 2,860 3,084 
Exports (total) 56,604 62,344 77,933 77,549 78,460 91,302 
   Goods 40,639 46,087 60,349 59,211 59,200 68,584 
      Crude oil and natural gas 15,679 20,416 34,837 33,543 33,172 .. 
      Ships 1,360 1,226 1,098 1,410 1,178 .. 
      Petroleum activities, various goods 92 640 81 375 38 .. 
      Other goods 23,508 23,805 24,333 23,882 24,811 .. 
   Services 15,965 16,257 17,584 18,338 19,260 22,718 
      Shipping 7,091 7,118 7,861 8,825 8,828 .. 
      Petroleum services, drilling a nd pipeline transport 921 1,171 1,321 1,322 1,697 .. 
      Travel 2,246 2,407 2,163 2,071 2,289 .. 
      Transport and communication 1,181 1,135 1,276 1,431 1,494 .. 
      Financial and business services 3,706 3,585 4,170 3,623 4,175 .. 
      Other services 819 840 794 1,065 776 .. 
Imports (total) 53,759 50,487 49,002 48,579 52,193 61,227 
   Goods 38,953 35,426 34,414 33,371 35,793 41,593 
      Ships 1,765 1,460 2,123 1,297 502 .. 
      Petroleum activities, various goods 1,977 1,104 868 427 844 .. 
      Other goods 35,212 32,861 31,424 31,647 34,447 .. 
   Services 14,806 15,061 14,588 15,208 16,400 19,634 
      Shipping 3,394 3,482 3,861 3,631 3,983 .. 
      Petroleum services, drilling and pipeline transpor t 767 1,035 798 925 1,254 .. 
      Travel 4,763 4,896 4,601 4,397 5,014 .. 
      Transport and communication 667 565 575 647 754 .. 
      Financial and business services 3,005 3,026 2,839 3,387 3,293 .. 
      Other services 2,209 2,058 1,914 2,221 2,100 .. 
Balance of primary incomes and current tran sfers -2,773 -3,346 -2, 929 -2,816 -1,707 -1,657 
   Primary income and current transfers from abroad 8,309 7,779 8,263 9,317 10,308 12,238 
      Compensation of employees 301 262 245 254 286 322 
      Reinvested earnings 1,081 1,059 882 701 340 383 
      Interest 4,921 4,215 4,935 5,750 6,944 8,175 
      Dividends 505 563 597 854 1,128 1,610 
      Current transfers to Norway 1,500 1,680 1,605 1,759 1,611 1,748 
Table I.3 (cont'd) Norway WT/TPR/S/138 
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  1998 1999 2000 2001 2002 2003 
   Primary income and current transfers abroad 11,081 11,125 11,192 12,133 12,016 13,895 
      Compensation of employees 746 730 720 554 536 643 
      Reinvested earnings 1,023 1,374 -342 -300 -431 -486 
      Interest 4,470 4,555 5,163 5,316 5,266 5,936 
      Dividends 1,810 1,339 2,755 3,186 2,696 2,994 
      Transfers from general government 1,109 1,041 1,096 1,226 1,626 1,891 
      Other current transfers from Norway 1,923 2,085 1,799 2,151 2,324 2,918 
Current account balance 72 8,511 26,002 26, 153 24,560 28,419 
Net capital transfers 115 59 284 11 61 -669 
Norwegian investment abroad, total 9,849 26,791 51,916 29,112 46,065 .. 
   Direct investment abroad 3,201 6,042 8,581 -726 4,954 .. 
   Portfolio investment abroad 9,499 7,078 25,579 30,850 27,911 .. 
   Other investment abroad 3,626 7,611 14,341 1,746 9,022 .. 
   International reserves -6,478 6,060 3,415 -2,758 4,178 .. 
Foreign investment in Norway 16,391 21,098 34,649 6,678 33,674 .. 
   Direct investment in Norway 4,354 8,073 5,967 2,022 1,018 .. 
   Portfolio investment in Norway 7,355 4,249 9,389 3,034 4,998 .. 
   Other investment in Norway 4,682 8,776 19,293 1,622 27,659 .. 
Undistributed capital transactions and statis tical discrepancy, net 6,499 2,644 8,638 4,003 12,683 .. 
Capital transaction (net lending) -43 8,337 25,904 26,436 25,075 .. 
Increase in Norway's net asse ts 1,691 7,879 24, 624 22,306 17,709 .. 
Memorandum:  average exchange rate (NKr per US$) 7.5 7.8 8.8 9.0 8.0 7.1 
.. Not available. 
Source:  Statistics Norway online in formation.  Available at: h ttp://www.ssb.no/en/mb/sm09311e.shtml.  
15. Import patterns have remained more stable sin ce Norway's last TPR in 2000.  Some 78% of 
merchandise imports in 2003 were manufactured goo ds (down from some 82% in 1998), roughly half 
of them in the machinery and transport equipment categories (Chart I.1).  Agriculture, mostly food 
products, accounted for some 9.6% of imports in 2003, and the rest is accounted for by mining 
products (Table AI.2).  
16. Norway's main trading partners are the member countries of the European Union (EU 15), 
which accounted for 76.6% of exports and 66.9% of im ports in 2003 (Chart I.2).  At the individual 
country level, the main markets for Norwegia n exports are the United Kingdom, Germany, and 
France, which combined received nearly 44% of total Norwegian exports.  The main individual 
suppliers of imports are Sweden, Germany, and De nmark, representing 37.3% of total imports in 
2003.  Norway's main trading partner outside the EU is the United States, followed by China and 
Japan (Tables AI.3 and AI.4). 
17. Norway's services balance has posted an incre asing surplus since its last TPR in 2000.  
Shipping is the single most important service expor ted by Norway;  shipping exports have grown 
constantly since 1998 and amounted to US$8.8 billion in 2002.  Other important services exports include financial and business services, trans port and communication services, and petroleum 
services.  Norway's balance of primary income a nd current transfers has posted a deficit since 1998, 
mainly caused by a high level of transfers from the Norwegian Government and dividend payments 
abroad. 
  
 WT/TPR/S/138 Trade Policy Review 
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0%20%40%60%80%100%
1998 1999 2000 2001 2002 2003
0%20%40%60%80%100%
1998 1999 2000 2001 2002 2003Chart I.1
Structure of Norway's merchandise trade, 1998-03
(a) Exports
(b) Imports
Source: WTO Secretariat calculations, based on UNSD, Comtrade database (SITC Rev.3).Agriculture
OtherTransport equipment
Other miningFuels Machinery
Semi-manufactures
Agriculture
Non-electrical machineryOther semi-manufactures
Mining
Automotive productsElectric machines
ChemicalsIron and steelTextile and clothingOther transport equipment
Other
 Norway WT/TPR/S/138 
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0% 20% 40% 60% 80% 100%199819992000200120022003
0% 20% 40% 60% 80% 100%199819992000200120022003Chart I.2
Direction of Norway's merchandise trade, 1998-03
(a) Exports
(b) Imports
Source: WTO Secretariat calculations, based on UNSD, Comtrade database (SITC Rev.3).United States
Other EU(15)United Kingdom Other AmericaJapan
Other Europe GermanySwedenChina (P.R.)Denmark
OtherUnited States
Other EU(15)France Other AmericaJapan
Other Europe GermanyUnited KingdomChina (P.R.)Netherlands
Other
 WT/TPR/S/138 Trade Policy Review 
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(ii) Foreign direct investment 
18. Since its last TPR in 2000, Norway has been both an important recipient and source of foreign 
direct investment (FDI), although the overall leve l of FDI inflows and outflows has decreased 
substantially.  Net FDI outflows reached their peak of more than NKr 64 billion in 2000 (Table I.4).  
EU countries, notably Sweden, Denmark and German y, remain the most important destination of 
Norwegian foreign direct investment.  Net FDI inflow s also peaked in 2000, at NKr 54.8 billion, and 
have remained at a relatively low level since.  Th e most important foreign investors in Norway are 
enterprises from Sweden, Denmark, and the United Kingdom. 
Table I.4  
Foreign direct investment by country, 1999-03 
(NKr million)  
 1999 2000 2001 2002 2003 
Net direct investment outflo ws 40,891 64,279 - 14,595 30,845 15,455 
Europe 29,712 35,480 -18,735 31,399 -596 
  European Union (EU 15) 21,737 34,326 -17,401 24,886 -1,520 
    Sweden 9,233 4,880 4,731 8,100 -739 
    United Kingdom 1,034 -3,712 3,146 376 3,474 
    Denmark 88 17,869 3,406 848 1,321 
    Germany 2,713 8,477 -17,887 19,222 -2,922 
Other European countries 7,975 1,154 -1,334 6,513 924 
America 4,887 -5,617 1,300 -2,186 5,332 
  United States 2,235 -5,686 -1,600 3,387 2,711 
Asia, Africa, Oceania 6,292 34,416 2,840 1,632 10,719 
Net direct investment infl ows 53,971 54,767 21,504 8,556 18,631 
Europe 49,818 48,449 16,291 2,062 9,629 
  European Union (EU 15) 49,588 45,412 16,822 3,245 9,702 
    United Kingdom 12,730 -2,550 3,452 2,069 2,007 
    Denmark 7,790 -2,447 2,739 254 8,198 
    Sweden 19,900 29,272 1,739 1,374 638 
    Germany 617 451 -1,062 -235 -586 
Other European countries 230 3,037 -531 -1,183 -73 
America -777 2,554 5,336 7,136 9,662 
  United States -1,974 -4,402 1,069 665 1,659 
Asia, Africa, Oceania 4,930 3,764 -123 -642 -660 
Source:  Norges Bank online information.  Available at: http://www.norges-bank. no/front/statistikk/en/investering/ 
 tidsserie.xls. 
19. With regard to sectoral distribution, Norway's FDI outflows have traditionally been important 
in oil extraction, manufacturing, and transport an d communications, although annual variations have 
been  considerable (Table I.5).  FDI inflows were  in manufacturing, oil extraction, and wholesale and 
retail trade.  Financial services were an importa nt recipient in 1999 and 2000, but FDI in this 
subsector has practically come to a standstill. 
Table I.5 
Foreign direct investment by sector, 1999-03 
(NKr million)  
 1999 2000 2001 2002 2003 
Net direct investment outflo ws 40,891 64,279 - 14,595 30,845 15,455 
Oil extraction and mining 3,939 -11,903 6,937 -5,226 9,384 
Manufacturing 11,462 24,145 12,370 19,180 813 
Wholesale and retail trade; hotels 
and restaurants 1,799 366 828 119 -358 
Transport, communications 3,133 36,134 -23,676 12,572 2,820 
Bank, financing and insurance 7,662 -1,647 576 3,589 1,604 
Table I.5 (cont'd) Norway WT/TPR/S/138 
 Page 11 
 
 
 1999 2000 2001 2002 2003 
Business activities 6,653 13,226 -10,720 -2,704 324 
Other sectors/unallocated 6,243 3,955 -910 3,315 868 
Net direct investment infl ows 53,971 54,767 21,504 8,556 18,631 
Oil extraction and mining 4,697 -19,698 7,767 7,688 1,122 
Manufacturing 11,270 14,030 3,672 -2,167 4,489 
Wholesale and retail trade, 
Hotels and restaurants 4,362 7,512 8,397 -953 -1,698 
Transport, communications 6,406 7,489 1,472 2,078 8,118 
Bank, financing and insurance 11,546 24,205 849 1,187 334 
Business activities 11, 864 16,731 1,548 1,633 6,925 
Other sectors/unallocated 3,826 4,498 -2,201 -910 -659 
Source:  Norges Bank online information. Availabe at: http://www.norges-bank. no/front/statistikk/ en/investering/ 
 tidsserie.xls. 
(4) OUTLOOK  
20. Higher economic growth is expected in 2004 , as result of strong growth in private 
consumption, driven by low interest rates and strong real income growth, as well as an upswing in 
mainland fixed business investment.7  Mainland GDP growth is expected to pick up from 0.7% in 
2003 to 3.2% in 2004.  Growth in consumer prices is expected to rise as the effect of the strong 
exchange rate in 2002 on import prices abates;  the consumer price index (CPI) is expected to increase 
by 0.5% in 2004 and 2% in 2005.  Following the economic recovery, the annual average unemployment rate is estimated to decr ease from 4.5% in 2003 to 4.3% in 2004. 
21. Projections, for the period 2005-07, contained in the National Budget for 2004, indicate a 
moderate overall growth.  Oil investments are expect ed to fall sharply, giving considerable negative 
impulses to the mainland economy.  This, together w ith limited room for additional fiscal expansion 
and assuming interest rate increases, would lead  to declining GDP growth rates in 2006 and 2007, 
from above-trend growth in 2005.  Unemployment figures are projected to decline in 2005 and to 
stabilize in 2006 and 2007, at just over 4%.  
 
                                                     
 
7 Ministry of Finance, Press Release No. 49/2004.