Tough decisions must be taken to diversify the oil economies | The National

Tough decisions must be taken to diversify the oil economies | The National:

"In November 2013, Norway’s prime minister, Erna Solberg, said that "We have to prepare Norway for an economy that [has] less oil income, directly, and less oil activity … That’s a 20-year perspective, not a four-month perspective." The Nordic country, where crude and natural gas accounted for 41 per cent of exports in the second quarter, gets about 25 per cent of its total economic output from oil and gas. As Norway has worried for some time about its diversification, so have the GCC countries, especially since the collapse of oil prices in 2014. The difference is that in the GCC, the 20-year perspective on diversification is more about creating the right preconditions than it is about opening the taps of government spending. In Norway, to promote a more diverse economy, Ms Solberg’s Conservative Party has so far focused on cutting taxes and boosting public spending. The government of Norway plans to withdraw money for a second consecutive year from its US$880 billion wealth fund and spend 226bn krone (Dh97.64bn) of its oil revenue, equal to almost 8 per cent of the economy. General government spending is already topping 50 per cent of GDP, a level not reached in 20 years. "



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