The sharp rise in crude oil and natural gas prices contributed to an increase in Gross National Income of NOK 788 billion in 2021, an increase of 22.2%, according to new figures from Statistics Norway (SSB).
After a sharp fall in the first phase of the pandemic in 2020, prices rose again, and then rose further in the second half of 2021. In addition, the recovery in the mainland economy after the pandemic and increased interest and dividend income in the Government Pension Fund Global contributed to the upturn.
“Since the prices of export goods increased much more than the prices of imports, Norway received significant exchange ratio gains,” section manager for the national accounts Pål Sletten said.
As a result, the calculated real disposable income for Norway, which is adjusted for inflation on domestic use, increased by as much as 24.2% from 2020 to 2021.
The rise in oil and gas prices alone accounted for more than two-thirds of the rise. Increased activity in the mainland economy accounted for barely one-sixth.
Large surplus in the foreign accounts
The historically high growth in National Income is primarily due to the large surplus in the foreign accounts, which amounted to NOK 659 billion in 2021. The financial accounts show that Norway’s net claims abroad increased by almost NOK 2,000 billion during the year 2021, to as much as NOK 11,718 billion.
The goods and services balance showed a profit of NOK 516 billion in 2021, corresponding to 12.4% of GDP. In the fourth quarter alone, the profit was NOK 257 billion. This is the highest level recorded for any quarter.
The record can be attributed to the fact that export prices for crude oil and natural gas were more than twice as high in the fourth quarter as in the same period last year.
“The price increase was in connection with several factors. Asian markets absorbed a larger share of Russian gas exports, which led to lower gas volumes reaching Western Europe. Furthermore, the green shift means that power production based on coal and nuclear fuel has been reduced in several countries,” Statistics Norway writes.
Income growth in households
The surplus in public administration also increased significantly in 2021, and was particularly driven by increased tax revenues from the petroleum activities as well as revenues from the government’s direct financial involvement (SDFI).
Net financial investments are estimated at NOK 375 billion, the highest surplus in public administration since 2012.
Households’ disposable income increased by 5.7% in 2021, and was particularly driven by higher wage incomes. The reopening of society in the second half of the year, as well as increased electricity prices, led to household consumption (measured in current prices) increasing by 7.7% in 2021.
As a result, savings fell by 3.6% compared with the previous year. The household savings rate was estimated at 12.8% in 2021.
Source: © NTB Scanpix / #Norway Today / #NorwayTodayFinance
Do you have a news tip for Norway Today? We want to hear it. Get in touch at [email protected]
Be the first to comment on "Norway registers historic growth in national income"