Norway, the right way
If you admired the Norwegian economy when times were good, you’ll love it now that its economy – along with the rest of the world – is on the brink of recession.
The oil-producing nation made piles of cash when the price of crude oil was marching toward record-high levels in previous years, given that energy represents about 70 per cent of its exports, in dollar terms, and exports represent about half of its gross domestic product.
But rather than blow the windfall on man-made islands and skyscrapers, the nation of five million people socked away $300-billion (U.S.) into a rainy day fund known as the Government Pension Fund-Global. It’s raining now, although few Norwegians are likely to get very wet, thanks in part to a $2.9-billion stimulus package approved on Monday. Rather than using debt to fund the increased spending (hello, Canada and United States), the money will be drawn from the fund instead.
Meanwhile, conditions are unlikely to get too nasty. The government has projected zero growth in 2009, down from an earlier estimate of 2 per cent growth. At the same time, the unemployment rate is expected to rise to 3.5 per cent from 2.5 per cent in 2008 – a sharp increase, but still at a level that the United States and Canada can only dream about.