As a result of the covid-19 pandemic, there was a drop in economic activity in Norway during 2020. In international comparison, and especially in the European context, the contraction of the Norwegian economy was not dramatic, and already in the second half of the year there was a reversal of the trend and a slight growth of GDP.
A combination of several favorable factors and measures contributed to the early start of the stabilization process of the national economy, such as the re-increase in the price of oil, the relatively low rate of spread of the disease in the country, effective fiscal support from the government maintaining the financial liquidity of companies and households, as well as a zero base interest rate facilitating the access of investors and consumers to funds.
In the 1st quarter of 2021, the pace of economic recovery slowed down due to the worsening of the pandemic situation in the country. In addition to services, the tightened government measures also affect retail significantly more than in the previous period. The volume of investment in the private sector remains low, as does the value of the Norwegian krone, which mainly helps Norwegian exporters.
This year, the Norwegian government plans to continue to provide a wide range of financial compensation to companies and individuals, but the total amount of support paid out should be roughly half of what it was in 2020, when it reached roughly 7% of GDP. The government’s goal is to limit the rapid growth of the state budget deficit and to reduce the currently excessive drawing of funds from the so-called oil fund.
As part of economic recovery, the government intends to place great emphasis on the creation of new jobs and progress in the diversification of the national economy, which is still heavily dependent on income from the production and sale of fossil fuels, and the related development of transport, energy and telecommunications infrastructure.
In the longer term, the Norwegian economy is moving towards climate neutrality, which is reflected in the more dynamic development of sectors supporting the green transition, such as low-emission transport, renewable energy sources and CCS, digital services, aquaculture and the “blue” economy.
Post-COVID-19 opportunities for foreign exporters
In the coming period, the rapidly developing sectors in Norway will include aquaculture, energy with an emphasis on renewable resources and low-emission solutions, technological innovation, digitalization, the maritime economy, transport infrastructure, defense or the extraction of undersea minerals. Opportunities for establishing cooperation between Czech and Norwegian companies still exist within the EEA/Norway funds.
In the rest of 2021, further project calls are expected to be announced, for example in the health or environment programs, and again also within the framework of the Fund for Bilateral Cooperation. New opportunities to establish business and investment relations with Norwegian entities are also offered by the increasingly financially supported development of the Arctic regions of Norway by the government, especially with the aim of stimulating the development of transport and energy infrastructure, strengthening rescue capacities and capabilities in the area, including security against landslides and avalanches.
In Norway, there is a massive electrification of the vehicle fleet, where during 2020, 54% of newly sold cars were equipped with an electric motor and around 20% were hybrid vehicles. At the end of 2020, electric and hybrid cars already accounted for 13% of all registered passenger vehicles in Norway. The government’s goal is to achieve 50% electrification of the vehicle fleet by 2030. In the case of long-distance buses and trucks, hydrogen should play a big role in addition to electrification.
From 2025, a ban on the registration of new vehicles up to ts with a classic drive is expected, after which it will be possible to register only emission-free cars. The same will apply to city buses and light commercial vehicles. Norway’s political goal is to reduce the volume of greenhouse gas emissions in transport by 50% by 2030 and to be completely emission-free by 2050.
The recently announced plan by the companies Equinor, Hydro and Panasonic to build a factory for the production of lithium batteries in the country, which should be launched in 2025, also responds to the development of electromobility in Norway.
According to allcountrylist, Norwegians demand high-quality cars that are durable in demanding climatic conditions with a favorable ratio of equipment and price – typically family cars for sport-oriented clients. The size of the vehicle fleet in Norway, which reflects the vastness of its territory more than the number of inhabitants, entails a constant demand for quality operational equipment (tires and spare parts).
Transport industry and infrastructure
The development of road and rail transport in Norway is a long-term priority of the government, which is gaining further importance in the context of the economic recovery related to the covid-19 pandemic. Government investments in maintaining existing infrastructure and building new ones will reach almost 9 billion USD during this year, which is 8% more than in 2020. More than a third of these funds will be used for road repairs, building new sections of backbone roads E18, E39 and E6 and modernization of road tunnels throughout Norway.
The government is also planning a significant increase in investments in the area of railway infrastructure. This will mainly involve the doubling of some parts of the busy Vestfold, Dovre and Østfold railway lines and the electrification of smaller lines in the Trøndelag region. A new ERTMS signaling device should then be installed on the Gjøvik line, which should then be extended to other parts of the country. It is currently one of the largest ICT projects in Norway.
There is also discussion about building a brand new train line from the town of Bodø (near the Lofoten Islands) northwards to Narvik and on to Tromsø and Sweden. The construction of this line beyond the Arctic Circle is also in line with the government’s strategy for the development of the Arctic.
The increase in rail capacity in Norway will create a need for new traction vehicles and wagons for public transport. Companies from the Czech Republic can also apply for competitions for the operation of passenger and freight transport on individual lines and for the supply of rolling stock. The Norwegian government, through the state-owned company Norske tog AS, plans further acquisitions of new train sets.
Mining, mining and oil industry
The backbone of the Norwegian economy remains the oil sector, which accounts for roughly 15% of the country’s GDP. Although the covid-19 pandemic led to a reduction in oil production on the Norwegian continental shelf during 2020 and to a reduction in investment in the exploration and development of deposits, the government, in an effort to increase the liquidity of oil companies and maintain jobs and increase investment in the development of the sector, offered oil companies generous tax breaks reliefs. Considering the importance of the oil industry to the Norwegian economy, the government will continue to actively take steps to quickly revive investment activity in all areas of the energy industry.
According to current estimates by the Norwegian Petroleum Directorate, more than half of Norway’s commercially usable oil and natural gas reserves remain unexploited. The Ministry of Petroleum and Energy continues to open new areas for exploration and production, most recently in the 25th licensing round (November 2020 – February 2021) it opened one new area in the Norwegian Sea and eight others in the Arctic Barents Sea.
In 2021, two more licensing rounds should take place, opening additional spaces, mainly in the northern part of the continental shelf. Therefore, Czech companies can continue to look for opportunities in the metalworking industry. The products of this sector can be used in the construction of new mining facilities and oil and gas infrastructure.
In connection with the fulfillment of climate commitments, Norway is increasingly emphasizing the domestic consumption of clean electricity. The demand for it will grow in the coming years, and with it the interest of Norwegian energy companies in investing in small hydroelectric plants, wind turbines, transformers, electrical energy storage and solar panels.
At the beginning of this year, the government released zones for the development of floating wind farms in the North Sea for the first time. In the areas of Utsira Nord and Sørlige Nordsjø II, production capacities for the production of electricity with an output of up to 4,500 MW per year should be installed on an area of approximately 3,500 km 2 in the coming years.
Norway is home to roughly 50% of Europe’s water reservoir capacity for electricity generation, and more than 1,600 hydroelectric power plants provide up to 94% of all electricity generation in the country. The existing infrastructure is usually already several decades old, and its renewal and modernization will require investments in the order of tens of billions of Norwegian kroner in the coming years.
Through grants, the government is starting to significantly support pilot projects for the commercial use of hydrogen, which, according to the new government strategy for hydrogen published in 2020, should significantly contribute to reducing emissions in Norwegian road and maritime freight transport. The government also significantly supports the development of CO 2 capture and storage (CCS) technologies.
Several major international actors are currently involved in the CCS technology development project in Norway, including the Finnish company Fortum, the German Heidelberg, the French Total and the British-Dutch Shell. On the Norwegian side, the most important partners are the state energy company Equinor and the company Aker Solutions.
As the CCS value chain is very complex and, in the Norwegian sense, very closely linked to the already existing oil and gas infrastructure in the North Sea, there are many opportunities in this emerging industry for companies from the fields of heavy industry, logistics and transport or ICT.
Agricultural and food industry
While the production volume of the traditional fishing sector in Norway has stagnated for a long time, industrial fish farming (especially salmon) is a very dynamically developing sector that is gradually becoming a key economic sector in coastal areas. Norway is currently among the world’s ten largest producers of farmed fish and ranks among the three most important global exporters of products from the aquaculture industry.
The value of farmed fish exported is up to USD 8 billion per year and is almost three quarters of the total value generated by the Norwegian fishing sector. In addition to fish farms located in sea coastal waters, terrestrial aquaculture is also beginning to expand in Norway, which should be more sustainable in the long term and, thanks to the use of technologically advanced equipment for water purification and circulation, the production should also reach a higher quality than the products of marine farms.
With regard to the growing popularity of the consumption of fish products in Europe and in the world, aquaculture in Norway has great potential for further development and will create a number of opportunities in the field of biotechnology, automation and for building infrastructure.