This 2018 Article IV Consultation highlights that Norway is in the midst of a healthy recovery from the oil downturn, supported by positive trends in oil prices and a strengthening labor market. In addition, banks remain profitable and well capitalized. However, household debt continues to increase and house prices have resumed their rise, especially in the Oslo area, after a correction during 2017. Mainland growth is projected to increase from 2 percent in 2017 to 2.5 percent in each 2018 and 2019, underpinned by solid consumption, stronger business investment and an export recovery. Petroleum investment will also pick up. As a result, output will likely start to exceed potential in 2019.
The taxation of extractive industries exploiting oil, gas, or minerals is usually treated as a sovereign, national policy and administration issue.This book offers a uniquely comprehensive overview of the theory and practice involved in designing policies on the international aspects of fiscal regimes for these industries, with a particular focus on developing and emerging economies. International Taxation and the Extractive Industries addresses key topics that are not frequently covered in the literature, such as the geo-political implications of cross-border pipelines and the legal implications of mining contracts and regional financial obligations. The contributors, all of whom are leading researchers with experience of working with governments and companies on these issues, present an authoritative collection of chapters. The volume reviews international tax rules, covering both developments in the G20-OECD project on ’Base Erosion and Profit Shifting’ and more radical proposals, identifying core challenges in the extractives sector. This book should become a core resource for both scholars and practitioners. It will also appeal to those interested in international tax issues more widely and those who study environmental economics, macroeconomics and development economics
This paper discusses the oil economy, outlook, and risk for Norway. Growth has continued to slow in the mainland economy. At the start of this year, oil prices had dropped by roughly 60 percent from their peak in June 2014 to less than US$40 a barrel. The labor market is feeling the sting of the oil price crash. The krone has weakened substantially along with the decline in oil prices. However, a modest recovery should take root next year. Mainland economy growth should be about 1 percent this year and pick up to close to 1¾ percent in 2017.
Ms. Elva Bova, Mr. Paulo A Medas, and Mr. Tigran Poghosyan
Resource-rich countries face large and persistent shocks, especially coming from volatile
commodity prices. Given the severity of the shocks, it would be expected that these countries
adopt countercyclical fiscal policies to help shield the domestic economy. Taking advantage
of a new dataset covering 48 non-renewable commodity exporters for the period 1970-2014,
we investigate whether fiscal policy does indeed play a stabilizing role. Our analysis shows
that fiscal policy tends to have a procyclical bias (mainly via expenditures) and, contrary to
others, we do not find evidence that this bias has declined in recent years. Adoption of fiscal
rules does not seem to reduce procyclicality in a significant way, but the quality of political
institutions does matter. Finally, non-commodity revenues tend to respond only to persistent
changes in commodity prices.
Mr. Rabah Arezki, Valerie A Ramey, and Liugang Sheng
This paper explores the effect of news shocks on the current account and other macroeconomic
variables using worldwide giant oil discoveries as a directly observable measure of news shocks
about future output ? the delay between a discovery and production is on average 4 to 6 years.
We first present a two-sector small open economy model in order to predict the responses of
macroeconomic aggregates to news of an oil discovery. We then estimate the effects of giant oil
discoveries on a large panel of countries. Our empirical estimates are consistent with the
predictions of the model. After an oil discovery, the current account and saving rate decline for
the first 5 years and then rise sharply during the ensuing years. Investment rises robustly soon
after the news arrives, while GDP does not increase until after 5 years. Employment rates fall
slightly for a sustained period of time.
This Selected Issues paper analyzes Norway’s economy that has a maturing oil and gas industry. Norway’s half century of good fortune from its oil and gas wealth may have peaked. Oil and gas production will continue for many decades on current projections, but output and investment have flattened out, and the spillovers from the offshore oil and gas production to the mainland economy may have turned from positive to negative. Thus far, economic policy has needed to focus on managing the windfall, and Norway’s institutions have been a model for other countries. Going forward, the challenges are expected to become more complex.
The December 2015 IMF Research Bulletin features a sampling of key research from the IMF. The Research Summaries in this issue look at “The Impact of Deflation and Lowflation on Fiscal Aggregates (Nicolas End, Sampawende J.-A. Tapsoba, Gilbert Terrier, and Renaud Duplay); and “Oil Exporters at the Crossroads: It Is High Time to Diversify” (Reda Cherif and Fuad Hasanov). Mahvash Saeed Qureshi provides an overview of the fifth Lindau Meeting in Economics in “Meeting the Nobel Giants.” In the Q&A column on “Seven Questions on Financial Frictions and the Sources of the Business Cycle, Marzie Taheri Sanjani looks at the driving forces of the business cycle and macroeconomic models. The top-viewed articles in 2014 from the IMF Economic Review are highlighted, along with recent IMF Working Papers, Staff Discussion Notes, and IMF publications.