Norway: 2025 Article IV Consultation-Press Release; and Staff Report

The 2025 Article IV Consultation for highlights that Norway’s economy has shown resilience amid global uncertainty, supported by strong fiscal buffers, a credible policy framework, and a robust net external asset position. These fundamental strengths should help Norway steer through the challenging external backdrop of increasing geopolitical tensions and trade policy frictions. Ahead of the September national elections, the fiscal stance remains expansionary, driven by increased defense spending. Macroprudential settings should not be eased further as systemic risks remain elevated. Monetary policy remains restrictive to address above-target inflation. While structural reforms have gained new momentum, with a reinforced focus on labor participation and public sector efficiency. The 2025 budget further widens the expansionary stance. Moving toward a broadly neutral stance by containing spending pressures would support the disinflation process and improve the cohesiveness of the policy mix. Advancing the reinforced work line agenda would raise total hours worked, reduce dependency on disability benefits, and enhance labor participation.