After the global financial crisis in 2008, recently oil prices fell to the lowest level. Investments in the oil industry in Norway are lowest since 2000. Oil companies have already abolished more than 20 thousand jobs, and this caused the highest unemployment rate (4.3%) in Norway in the last 11 years. However, unemployment in Norway is low compared with Greece (~25%) or Spain and is much lower than in most other European countries. Nevertheless, the Prime Minister of Norway Erna Solberg is preparing financial reform to mitigate symptoms of the crisis. Definitely, the plan is to use money from Norway’s sovereign wealth fund to create more jobs and increase competitiveness. The government of Norway wants to present tax reform and make country more attractive to investors. E. Solberg’s conservative government works for the second year and believes that current situation in Norway might be similar to the financial crisis a few years ago. As the price of the oil dropped, Norway’s expenses may exceed revenues from oil. This have already weakened Norwegian Krone, whose value compared to the euro decreased by 9% during this year. Due to the weakened Krone, inflows to the tourism industry increased and the local exporters are selling more goods, but the Prime Minister stated that Norway needs to free itself from dependence on the oil. The country is the largest crude oil extractor in the Western Europe and the fourth richest country in the world according to their gross domestic product per capita and the second richest in the Europe after Luxembourg.
Norway will have to search for other alternative investment management methods to restructure its economy, which is affected by low prices of the oil and other non renewable resources. For a number of years Norway has been preparing for the period when they will not be able to extract as much oil and gas as they did in their gold ages. Mining has already become extremely expensive which requires complicated stations in the sea.
This year the economy of Norway, excluding oil and gas sectors, is expected to grow only 1.3%, next year around 2%. However, since these forecasts have been done, crude oil prices have dropped by nearly 30%. Consequently, cheap oil is a greater threat to economy of Norway than the global financial collapse.