What's Happening in Norway?

Norwegians seem to be getting worried. What could possibly be going wrong? 

Norway maintains a welfare model with universal health care and a comprehensive social security system.The country has the fourth-highest per capita income in the world on the World Bank and is the world's largest producer of oil and natural gas outside the Middle East, from 2009 to 2012.  Today, Norway ranks among the richest countries in the world and the United Nations Development Program  has repeatedly declared this Scandinavian country to be the best country to live in. Norway’s health sector is financed through taxes and is supposed to be equally accessible by all residents, regardless of their income.  Percent Insured? 100%. All Norwegian citizens and residents are covered! Plus, education is free. So. what can be the problem, Ole? Perhaps, life has been too good? Visitors find Norway to be a very expensive country.

-------------

   Stavanger has now joined Oslo in the dubious honor of being among the world’s most expensive cities, which makes it also the most vulnerable city in Norway if real estate prices drop.Houses are so expensive, people can’t afford to buy. Changes ahead?
--------------
 Other Scandinavian countries have a variety of export production.Swedish exports have decreased seven percent in the past year, yet they are doing well. The economy of Sweden is a export-oriented, diverse economy aided by timber, hydropower, and iron ore, and this is the base of
 

    an  economy oriented toward foreign trade. The main industries include motor vehicles, telecommunications, pharmaceuticals, industrial machines, precision equipment, chemical goods, home goods and appliances, forestry, iron, and steel. Iron ore and timber constitute the resource base of their economy heavily oriented toward foreign trade

--------------

  “Timber is nearly always available in Finland, which is something you cannot say of all foreign operators,” states Marko Saarelainen, President of Honka Japan, a subsidiary of a  log house manufacturer cooperation, Japan is the single most important buyer country. Japan appreciates wood as a construction material.Their earthquake risk means that Japan has strict strength requirements for structures and joints. These can be met by wooden

Finland's  forestland

constructions.Japanese companies have tested the stability of their log houses during earthquakes. The results were so good that their safety is not questioned. “A log house does not collapse,” according to Saarelainen . Forests play a key role in Finland's economy, making it one of the world's leading wood producers and providing raw materials at competitive prices for the crucial wood-processing industries. Diversification and a wide range of products protects Finland’s export market.

--------------

Much like Norway, Denmark has a broad-reaching welfare system, which ensures that all Danes receive tax-funded health care and unemployment insurance which might account for  Denmark having had the world's highest tax level in 2005 and 2006, at 50.7% and 49.1% respectively, holding this position through 1970-74 and 1993-95.Denmark is home to various types of agricultural production and fur animals – primarily mink, all sectors with a major export.
   The United States is Denmark's largest non-European trading partner, accounting for about 7% of total Danish merchandise trade. Among major Danish exports to the United States are industrial machinery, chemical products, furniture, pharmaceuticals, canned ham and pork, windmills, and the famous and for entertainment, the
popular  plastic toy blocks...The Lego!

-------------

A Danish off-shore wind farm

  Denmark is a long time leader in wind energy and a prominent exporter of wind turbines. There is also a  focus on intelligent battery systems  and plug-in vehicles in the transport sector.This modern market economy features high-tech agriculture, up-to-date small-scale and corporate industry, extensive government welfare measures, comfortable living standards, and high dependence on foreign trade. Not only that, Denmark has considerable sources of oil and natural gas in the North Sea and ranks as number 32 in the world among net exporters of crude oil. Scandinavian exports seem o be well-rounded and doing well. Nothing to worry about.

----------------

A Norway North Sea oil-drilling site

In comparison, Norway maintains a highly regarded standard of living, but  seems to have the smallest variety of export goods while holding claim to be one of the largest oil and petroleum exporting areas. This blessing appears to be a future problem. There has been concern that much of Norway's human capital investment has been concentrated parimarily in petroleum-related industries.Because of the oil boom since the 1970s, there has been little extensive government incentive to help develop and encourage new industries in the private sector, in contrast to other Nordic countries like Sweden and particularly Finland.

--------------

  Norway has not experienced a recession since 1990. From 2004 to 2007, their economy expanded mainly due to high oil prices. Norwegian house prices have dropped 5 percent since August as the market retreats from a half-decade-long real-estate boom. Nordea Bank, the largest Nordic lender, warns that Norway’s housing market may sink as much as 20 percent over the next two years. The oil industry may be a big part of the problem.Norway has always depended on the oil industry to support their country’s high living standards and oil exports are Norway’s most important export. Norway does not have an alternative export product of offset the loss of the oil market.

 If the demand for Norway’s oil decreases, what else can be the chief export?

Lutefisk?

Norway had the foresight to put aside a massive $860 billion rainy-day cash pile, or $170,000 per man,

woman and child. It also has huge budget surpluses, a top-notch AAA credit rating and low unemployment. The outlook for the present time  is fine, but costs have soared, non-oil exporters are struggling, the government is spending $20 billion more oil money this year than in 2007 on  their generous welfare and education  system. This  depends on a steady flow of oil tax revenue and  may not be preparing Norwegians for tougher times.

Handelsbanken economist Knut Anton Mork has commented that Norway must act if it is to avoid decline.
“The oil boom has ended,” Mork said. “Norway needs to rebalance to a more sustainable level, which can be done either through a nominal depreciation or through an internal devaluation of wages.

The " rainy day oil-cash pile" is being used to fuel  the benefits enjoyed by all Norwegians and these funds will slowly be reduced if not replaced by an alternative money source .

Time to plan for the future.