Norwegian exports have performed well

By: Our Analysis Centre

The value of Norwegian exports in US dollars fell by just 0.5 per cent in 2020, compared with declines of 5 per cent for Sweden, 8 per cent for Denmark and 16 per cent for the UK, according to OECD (Organisation for Economic Co-operation and Development) calculations. The six countries with the smallest declines in exports in 2020 were Ireland, Luxembourg, Israel, Lithuania, Poland and Norway. The volume of Norwegian goods exports fell by less than one per cent in 2020, according to the IMF (International Monetary Fund).

'Many Norwegian export companies have weathered the crisis well. Established businesses have adapted rapidly, and we are now seeing new export industries emerge,' says Håkon Haugli, our CEO.

Like most other countries, Norwegian export companies also faced more challenging conditions in 2020. The value of Norwegian exports in kroner fell sharply, with key export industries such as oil and gas and tourism-related services contributing to the decline. At the same time, only five OECD countries recorded a smaller fall in exports than Norway, measured in US dollars.

Figures from Statistics Norway show that Norwegian exports also increased in Norwegian krone terms in the first quarter of 2021 compared with the first quarter of 2020, and March 2021 was in fact a record month for Norwegian exports. The OECD expects Norwegian exports to grow by 2.3 per cent over the course of 2021, followed by a further 4.2 per cent in 2022.

The weakening of the Norwegian krone during 2020 boosted Norwegian exports and was a key reason why their value in US dollars remained stable. Yet even after adjusting for the weaker krone, several traditionally important export products performed very well throughout 2020. Despite the pandemic, seafood exports ended the year at roughly the same level as in 2019, making 2020 the second-best year on record for Norwegian seafood exports. One major reason was the seafood industry's swift response to a situation in which it could no longer sell fresh fish to restaurants around the world, increasing sales of frozen fish to households instead. Major exports such as metals and chemical products also remained resilient throughout the pandemic. Norwegian exporters of ICT services also recognised the demand created by lockdowns and increased their exports in 2020. ​

Although many businesses have weathered the crisis well, Norway still faces some of the same export challenges as before the crisis. The impact of the fall in oil prices at the start of 2020 on Norway's total exports illustrates this. We must seize new export opportunities and build new export industries. This requires innovation, adaptability and targeted investment. Green industry represents a major export opportunity for Norway.

Norwegian companies now place greater emphasis on sustainability than before. Sustainability has gone from being a competitive advantage to a prerequisite. Access to capital has improved for green small and medium-sized enterprises and projects. The extensive recovery packages launched in the US and the EU are being used to accelerate the green transition. Of the EU's total budget of €1,750 billion up to 2027, including recovery funding, at least 30 per cent will go towards climate action. The EU's ambitious 'European Green Deal' aims to make Europe climate-neutral by 2050 and cut emissions by 55 per cent by 2030. As part of the programme, at least €1,000 billion will be invested in sustainable projects through the EU budget and related instruments.

Norwegian companies must also be part of this development. To help Norway transition to a sustainable economy, we have proposed establishing a green investment platform.

'Norway may have some of the best conditions in the world for seizing these opportunities. But favourable conditions alone are not enough. To ensure we do not fall behind our neighbouring countries in green industry, we have recommended establishing a green investment platform. The aim of such a platform must be to unlock private capital and investment to help projects grow and generate new green exports,' says Haugli.

Norwegian-made batteries have significant export potential. The US Energy Information Administration expects the number of electric vehicles in OECD countries to rise from 3.5 million in 2018 to 169 million by 2050. In this context, the Confederation of Norwegian Enterprise (NHO) estimated that Norway could account for between 2 and 5 per cent of global battery production by 2040, and that Norwegian battery exports could reach NOK 100 billion a year by 2030. Five battery cell factories already planned in Norway are estimated to have the potential to employ up to 20,000 people.

Other major export opportunities for Norway include hydrogen initiatives in Germany, offshore wind in France and North America, seafood, ocean technology, sustainable buildings, and health and agricultural technology. Targeted efforts are needed to ensure that Norway can capture a share of these markets.

'We need more major industrial initiatives in sustainable sectors in the years ahead. Demand in international markets must be linked to business development in Norway. We enable innovation and growth in the areas we believe will be crucial in a global market,' says Haugli.