Stabile Norwegian economic system and challenges of fragile global financial flow

Norway is one of the healthiest economies in Europe due to its low unemployment rate, interest rates, and inflation. However, in terms of per head, proportionally, Norway is one of the wealthiest countries in Europe. Strong growth in consumer spending, fiscal stimulus and recovery in the housing markets are contributing to the healthy economic growth. Against this background, the key policy rate is kept unchanged at 1.5%. After growing at an annual rate of 2-3% over the last several years, the economy is expected to grow at 2.25% this year, as per the IMF. This is well ahead of the euro zone that could contract by 0.5%. Norway is among the richest countries in the world i.e. the third-richest nation per capita has an unemployment rate of less than 3 percent and offers its citizens free health care and education). It has a lock on the top spot in the annual United Nations human development index and has amassed a $582.7 billion sovereign-wealth fund from its oil revenue, amounting to $128,000 per inhabitant. The government limits spending of oil revenue to 4 percent of the fund, to ease the effects of wealth on the economy. Despite the challenging global economic environment, the Norwegian economy continues to go ahead well due to benefits of the government pension fund. The fund comprises the government pension fund global (GPFG) and the government pension fund Norway (GPFN). The fund capital is invested abroad in international equities, bonds and real estate. The fund is managed with a view to achieving the highest possible return over time, subject to a moderate level of risk. The time horizon of the fund investments is very long. Key words: economic flow, Norway’s financial system, financial sector. Government Pension Fund Norway (GPFN