Norway outlook positive despite trade tension, Europe slowdown, IMF says

OSLO: Norway stands out among advanced economies with a positive economic outlook, despite global trade tensions and uncertainty over growth in the wider European region, the International Monetary Fund said on Monday.

Norwegian mainland growth, which excludes the volatile oil and shipping sectors, was seen rising 2.5 percent, up from the 2.4 percent forecast the IMF foresaw in September. In 2020, the mainland economy will likely grow by 2 percent, it added.

"This is remarkable, because other countries' economies are slowing down," Jacques Miniane, the IMF's head of mission in Norway, told reporters, adding that the IMF welcomed the planned tightening of interest rates by the Norwegian central bank.

"The Fed has paused. The ECB has clearly paused. The Bank of England is pausing ... whether you look regionally or more broadly, few ... are tightening (monetary policy)," he later told Reuters.

Norges Bank's rate path shows the bank sees rates averaging 1.1 percent in 2019 and 1.6 percent in 2020, compared with 1.0 percent now. Its next rate decision, which will be announced on Thursday, is expected to keep rates on hold, according to a Reuters poll.

The IMF called on Norwegian policy-makers to use the current good economic climate to make necessary long-term reforms now, including reducing sickness and disability schemes, which have more people signed up in Norway than in other countries.

In terms of fiscal policy, the IMF expected the Norway's to be "roughly neutral" this year.

"This is a big improvement, because in the past the fiscal deficit was increasing," Miniane said. "We would like fiscal policy to see some consolidation ... to rebuild some financial buffers" to prepare for the next downturn.

Norway's government will announce its revised fiscal budget for 2019 on May 14.

Finance Minister Siv Jensen welcomed the IMF's conclusions. "We are well aligned when looking at the challenges of the Norwegian economy," she told reporters. "We need to identify cuts and savings ... The fiscal space can be widened."