1.5 single spaced page analysis on Norway Currency and Sovereign Fund

General instructionswrite 1.5 single spaced page based on powerpoint and using official sources to substantiate analysis and description, start with the .5 page word document attached (it should be extended to 2 full single spaced pages).Client Commentsi have a half a page done. it’s supposed to be 2 full, single spaced and it about the Norwegian Currency and the Sovereign Fundthere is no rubric and some of the sources could be IMF and websites such as thatCIA world FactBookno it’s a paper based off our presentation i’ll show my slides
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International Economic Profile
Norway
A Brief History: The Roots
Bronze Age petroglyphs showing a man
ploughing the earth. From Aspberget in Bohus
County, Sweden, not far from the current
Norwegian border.
A Brief History: Geography
A Brief History: War
WW2
Swedish–Norwegian War, also known as
the Campaign against Norway
Economic Statistics: GDP
Currency: Norwegian Krone
Currency: Norwegian Krone
Economic Statistics: Unemployment
Economic Statistics: Consumer Price Index
Economic Statistics: Population
Economic Overview
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Economy transformed in mid-1970s, major oil & gas producer.
High per capita income, large influx of capital investment into its
North Sea oil & gas fields.
Oil & gas sector contributes roughly half of Norway’s total export
revenue.
In 2015, Norway was the 3rd largest natural gas exporter in the
world, supplying 20% of total Euro gas consumption.
NORWEGIAN FOREIGN TRADE IN FIGURES
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Very open economy, trade is 67% of their GDP.
Exports energy-intensive products and imports high-technology
items.
2nd seafood supplier in the world.
Within top 25 exporters in the world (excluding inter-EU trade)
High trade surplus, declining in recent years
7th most important trading partner with the European Union
Foreign Trade Indicators
2012
20133
2014
2015
2016
Imports of Goods (million USD)
87,308
89,808
89,185
76,228
72,335
Exports of Goods (million USD)
160,953
156,022
144,591
105,372
88,963
Imports of Services (million USD)
52,328
56,210
56,052
45,758
47,092
Exports of Services (million USD)
46,372
48,575
49,305
40,290
36,404
Imports of Goods and Services (Annual % Change)
3.0
5.0
2.4
1.6
2.3
Exports of Goods and Services (Annual % Change)
1.6
-1.7
3.1
4.7
-1.8
Imports of Goods and Services (in % of GDP)
27.5
28.4
29.8
32.1
33.3
Exports of Goods and Services (in % of GDP)
40.6
39.1
38.8
37.7
34.1
Trade Balance (million USD)
72,026
63,704
52,620
27,486
13,947
Foreign Trade (in % of GDP)
68.1
67.5
68.6
69.8
67.4
Trading with Norway
Benefits Trading with Norway:
? Positive reputation
? English widely used as a business language
? High standards of living
? Stable economy
? Very open market
Strengths of the Norwegian Market:
? Vast natural resources
? Efficient business culture
? Low levels of corruption
Main Customers
2016
(% of Exports)
89.1 bn USD of products exported in 2016
Petroleum oils and oils obtained from bituminous…
25.4%
Petroleum gas and other gaseous hydrocarbons
23.1%
United Kingdom
20.7%
Fish, fresh or chilled (excl. fish fillets and…
7.3%
Germany
14.3%
Petroleum oils and oils obtained from bituminous…
3.6%
Netherlands
10.6%
Unwrought aluminium
2.7%
France
6.8%
Sweden
6.5%
Main Suppliers
2016
72.5 bn USD of products imported in 2016
(% of Imports)
Germany
12.0%
Motor cars and other motor vehicles principally…
7.1%
Sweden
12.0%
Petroleum oils and oils obtained from bituminous…
2.5%
China
11.1%
Cruise ships, excursion boats, ferry-boats, cargo…
2.5%
United States
6.5%
Automatic data processing machines and units…
2.1%
Denmark
5.6%
Medicaments consisting of mixed or unmixed…
1.8%
Trading System
? Norway is among the group of richest countries in the world measured by GDP
? Not a Member of the European Union but has a relationship through European
Economic Area and also a founding member of European Free Trade
Association
? Top Countries they trade with : UK, Sweden, Germany, Netherlands, France,
Sweden
? 30th largest world Export Economy
Trading Resources (Exports)
Crude Petroleum – 26%
Petroleum Gas – 23%
Fresh Fish – 7.2%
Raw Aluminum – 2.7%
Passenger & Cargo Ships – 1.4%
Other- 39.7% (Machinery, Electric Equipment, Chemicals, Wine,
Water
? Total Cost for Exports: 89.4 Billion
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Trading Resources (Imports)
Cars – 7.1%
Passengers and Cargo Ships – 3.0%
Refined Petroleum – 2.5%
Computers – 2.0%
Packaged Medicaments – 1.8%
Furniture -1.5%
Other – 82.1%( Food, Fruits, Medical Instruments, Wine, Knitted
Clothes)
? Total Cost for Imports – 72.3 Billion
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What is Foreign Investment?
? Foreign investments involve capital flows from one country to
another, which grants ownership stakes in domestic
companies and assets.
? Foreign investment is seen by many as a catalyst for economic
growth to occur in the future.
? Investing in foreign countries has been a modern trend
recently, with many multinational firms having investments in a
variety of countries.
Why Foreign Investment?
? Although, being able to be made by individuals, most often
pursued by large companies or corporations with large amount
of assets looking to reach even farther than their respective
country.
? Larger inflows of foreign investments are needed for the
country to achieve a sustainable high trajectory of economic
growth.
? For a countries economy to grow by 7-8 percent, 35-40 percent
of GDP must be invested in foreign countries.
Foreign Investment for Norway
Foreign Direct Investment
2014
2015
2016
7,987
11,654
-5,533
166,151
138,244
135,900
Number of Greenfield Investments***
41
23
27
FDI Inwards (in % of GFCF****)
6.8
12.9
-6.2
33.3
35.8
36.7
FDI Inward Flow (million USD)
2016 was at a negative because the fall of prices of hydrocarbons
FDI Stock (million USD)
Foreign investors reluctant to invest in mining industry
FDI Stock (in % of GDP)
Government Measures to Regulate
Investments
The Seven Sisters
Norwegian Parliament
Portfolio Investment Flows
2013
2014
2015
2016
6 413
7 904
9 066
9 136
5 048
6 341
7 362
7 427
Banks
250
237
251
253
Insurance and pension funds
443
494
560
588
Unit trusts
362
433
462
493
Other financial corporations
173
236
240
213
Non-financial corporations, households etc.
138
162
192
163
Equities, for all sectors
3 705
4 600
5 316
5 482
Debt securities, for all sectors
2 708
3 303
3 750
3 655
Portfolio investment, total
Sector
Central Government
Object
Portfolio Investment Flows (Cont.)
Why companies choose to invest in Norway
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A stable and transparent political environment
The country is a world leader in information
A well organized public sector and quality infrastructure
The population enjoys a high purchasing power
The business environment is stable
A highly skilled labour force, which means there is great growth
potential in services and knowledge-based industries, such as
information and communications technologies
Points to be careful about
? Norway’s Economy is extremely dependent on oil. The problem
is, they are past the peak of their oil production.
? Due to geographical isolation from some countries, transport,
logistics, and telecommunication infrastructure expenses are
very high.
? Labor markets are strictly regulated and labor costs are very
high.
Monetary Policy
Fiscal Policy
Not expansionary as of now
Revenue depends on oil prices
Unlike Norway, US has well diversified sources of revenue
Trade Exchange Rate
1 USD=7.84 NOK *
Floating Exchange rate
Trading goals
– Secure market access for existing and new export markets.
– Attract foreign investments.
– Position Norway as a leading research and development hub.
– Increase exports from existing export industries and facilitating new ones.
– Participate in multilateral and plurilateral negotiations to improve exports, like the
EGA (Environmental goods agreement) and TISA (agreement on Trade in Services)
negotiations.
– Trade policy collaborations with the European Union and Britain.
– In 2017 the government presented its ocean strategy to promote ocean industries.
– Norway will continue to be a leading exporter of oil and natural gas ( as only one
third of its gas reserves have been exploited so far)
– Increase export of Norwegian agricultural products as they have competitive
advantage in the global market.
– Secure a competitive official export credit program.
Work Cited
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http://www.sundaytimes.lk/110529/Columns/eco.html
https://www.investopedia.com/terms/f/foreign-investment.asp
https://www.nordeatrade.com/en/explore-new-market/norway/investment
https://atlas.media.mit.edu/en/profile/country/nor/
The Norwegian Krone
The Krone in english translates to the word Crown, which is fitting considering its
strength since its conception. It replaced the Norwegian Speciedaler in 1875 – and around 1878
new denominations were introduced with one, two, five, ten, twenty-five, and fifty. The coins
varied in metals from bronze, silver and gold. When it was introduced it was introduced at a
fixed rate of 4 Kroner to 1 Speciedaler. The transition also placed Norway in the Scandinavian
Monetary Union in 1873. After the adjournment of the Scandinavian Monetary Union Sweden,
Norway and Denmark kept the names of their currencies. After terminating the fixed exchange
rate between the Krone and the Speciedaler, the reinstatement of the exchange rate created a
distrust in the Kroner and led to a shortfall in approximately 2 billion Kroner in reserves in the
Norges Bank.
With the the Norwegian economy being extremely strong, and showing significant
growth since the dawn of the industrial age their GDP per capita is among the highest percentile
in the world. With most of the Economy being powered by natural resources, hydroelectric
power and seafood. The Norwegian government implemented the Norwegian Sovereign Wealth
Fund, a

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