The Hindu Business Line : Norway's economy — On top of the world and looking...

FOLDS upon folds of translucent purplish-green cut wide arcs across the sky. Then, suddenly, the entire dome of blue exploded into an amazing riot of colour — red, green, blue, purple, yellow and white that lit up the ocean and rendered us speechless with wonder.

That was my first — and best acquaintance with an Aurora Borealis, the Northern Lights, as we cruised along the unspoilt coast of Norway's westernmost point — Stadtinlet, and headed across the open sea to the delightful town of Alesund. Watching the beautiful Aurora in its fullest splendour, I concluded the same of the Norwegian economy.

Norwegians are the wealthiest people in Europe, with a GDP per head of euro 45,000, against the EU average of euro 16,000. According to the United Nations, they are also the healthiest and happiest people in the world and Norway is the best country to live in.

At a time when France and Germany are struggling with high unemployment levels and social unrest, Norway has an unemployment rate less than half the EU average. Its real interest rates are comfortably below those in the euro-zone. Inflation is low and its trade, booming.

Norwegians have become Europe's new elite and are buying beach homes in the Turkish Riviera, chalets in the Swiss Alps and country homes in South of France.

How have they done it? Much of the answer has to do with the deal they struck with Brussels. Norway is a member of the European Free Trade Association (EFTA). Safely remaining in the EU penumbra, the country participates fully in the so-called Four Freedoms of the European single market-free movement, that is, of goods, services, people and capital.

Norway's state employment agency set the country's jobless rate at 3 per cent. Other agencies have argued that the real level of unemployment is higher, but it does appear there is more demand for workers.

Unlike people from other European countries such as the UK, France and Germany, Norwegians who officially have registered themselves as unemployed, do not seek state assistance, but try looking for new jobs on their own.

The State Employment Agency claims it also registered 24,700 new job vacancies, up 47 per cent from November last year.

Inflation in Norway has remained low with prices barely rising on an overall basis. The annual inflation rate was set at 1.8 per cent in November, unchanged from the rate in October. The central bank of Norway has long had an inflation target of around 2 per cent.

Norwegian businesses are reporting earnings that collectively are more than double the amount earned the previous year. Fresh accounts from 114,000 companies suggest business is booming, and not just for oil-and gas-related firms.

Low interest rates are fuelling much of the profit growth. Low financing costs are leading to increased borrowing and loosening purse strings. Financing costs are low and consumers are willing to borrow and spend, as they're not saddled with high financing costs either.

There is robust growth across all sectors of industry. The hotel and restaurant businesses are among the strongest, with results quadrupling from 2003 to 2004.

The bottom of the Norwegian coast abounds in sea cucumbers, which are an expensive delicacy in China. And exports can be worth a few thousand Norwegian crowns per kilogram. Just five years after the "dot-com bust" hit the economy, business and profits have grown manifold.

After-tax profits of nearly 17,147 Norwegian companies had swelled by more than 60 per cent last year. Even industrial firms that were not faring so well till recently managed to double their results. Low interest rates, robust growth in personal consumption and sky-high oil prices that are pumping more investment into the oil industry are the main reasons for the boom.

Businesses, however, are using the currently good times in Norway to prepare for potentially hard times ahead as foreign competition becomes even tougher.

Nobody spends more money on their homes than the average Norwegian.

Norwegians are the most eager home decorators in all of Europe. Last year, they spent about $5.8 billion to refurbish their homes. All told, the average Norwegian uses 27 per cent of take-home pay on home decorating. The redecorating wave is also believed to be a factor behind ever-rising real estate prices in Norway. The prices for single-family homes and flats have skyrocketed as sellers demand more for remodelled property.

The kitchen and bathroom décor business in Norway has soared in recent years, in line with higher consumer expectations, increased spending power and wider choice.

However, in implementing new technology Norway is slowly but surely beginning to lag behind its Nordic neighbours.

According to the OECD (Organisation for Economic Cooperation and Development), Norway needs more innovation and centralised initiatives directed at IT.

The OECD has set up a ten-point list to help Norwegian businesses improve their IT useage. Though Norway has long been among the best in adopting new technology, both in business and the public sector, its IT development has remained static.

Large sectors of Norwegian industry are dawdling over wide-scale IT adoption and both innovation and e-commerce are particular trouble spots. Norway's research and development levels were well below the OECD average in the IT sector.

While Norwegians continue to lead in the use of computers, the Internet and mobile telephony, this doesn't amount to much when it comes to e-commerce and broadband.

Despite a reputation as a nation specialising in thickets of taxes and bureaucracy, Norway is now rated the sixth best place in the world to start a business.

Regulations are relatively simple and inexpensive, says to a World Bank study, which rates 145 countries according to the administrative and regulatory obstacles a new company must navigate during its start-up phase. New Zealand took the top spot, ahead of the United States and Singapore. Australasia dominated the list, with five of the top six places.

As 2005 draws to a close, Norway celebrates the high point of the Yuletide season with some 600 tonnes of imported radiance — read Christmas lights. That is 105 tonnes more than last year.

The traditional bowl of unshelled nuts, tangerines, Clementines and marzipans are in plenty.

Norwegians have imported 10 million DVDs and this could be the most popular gift under the tree. As in the past years, the Oslo boy's choir, Soelvguttene (The Silver Boys), led by Torstein Grythe, will traditionally kick off Christmas celebrations in Norwegian homes with a nationally broadcast concert at 5 p.m. on Christmas Eve.

North of the Arctic Circle in this `Land of the Midnight Sun', the `Nordic twilight' lights up the landscape in the middle of the summer night. And, the celestial and breathtaking Northern Lights become a kaleidoscope of midnight activity in the winter sky.

Europeans turn green-eyed and speechless as they regard the economic phenomenon in this icy strip of tundra, on the uttermost edge of the continent. Norwegians definitely are on the top of the world!

(The author is a former Europe Director, CII, and lives in Cologne, Germany. Feedback may be sent to mohan.murti@t-online.de)