Norway: country overview03 September 2012
by Ina Dimireva -- last modified 29 January 2017
Norway considered joining the European Community in 1972 and the EU in 1994., Norway joined the EEA in 1994. The EEA Agreement covers most aspects of its relations with the EU including: the EU single market – all relevant laws, except those dealing with agriculture and fisheries, apply to Norway; EU Agencies and programmes – Norway participates in a number of them, albeit with no voting rights; social & economic cohesion in the EU/EEA – Norway contributes financially; regular political dialogue on foreign policy issues at ministerial and expert level.
Member of Schengen area: Yes
Political system: Monarchy
Capital city: Oslo
Total area: 323 802 km²
Population: 4.7 million
Currency: Norwegian krone
Norway's has a stable economy with a vibrant private sector, a large state sector, and an extensive social safety net. Norway opted out of the EU during a referendum in November 1994; nonetheless, as a member of the European Economic Area, it contributes sizably to the EU budget.
The country is richly endowed with natural resources in addition to oil and gas, including hydropower, fish, forests, and minerals. The government manages the country's petroleum resources through extensive regulation. The petroleum sector provides about 9% of jobs, 15% of GDP, and 39% of exports, according to official national estimates. Norway is one of the world's leading petroleum exporters, though oil production in 2015 was close to 50% below its peak in 2000; annual gas production, conversely, more than doubled over the same time period.
In anticipation of eventual declines in oil and gas production, Norway saves state revenue from petroleum sector activities in the world's largest sovereign wealth fund, valued at over $800 billion as of early 2016. The government allows itself to use up to 4% of the fund's value, its annual expected real rate of return, to help balance the federal budget each year. After solid GDP growth in 2004-07, the economy slowed in 2008, and contracted in 2009, before returning to modest, positive growth from 2010 to 2015. Lower oil prices in 2015 caused growth to slow, increased unemployment, and weakened the Norwegian krone. The latter trend has mitigated the negative impact of lower oil and gas prices by making Norwegian exports cheaper for foreign buyers. The government has expressed willingness to increase public spending from the sovereign wealth fund to help prevent a recession..