TNAG-2050-FCO40-2920-Visits-by-Lord-Caithness--Minister-of-State-for-Foreign-and--1990 — Page 145

Q.

all the coalition partners can live, is becoming an

increasingly influential factor. With the anti-EC Centra

Party's recent public insistence that Prime Minister Syse

must not compromise in EC/EFTA negotiations, Norway's so called concessionary laws which impede foreign ownership of property and of financial and industrial enterprises, the coalition is in danger of collapse.

Economy

8.

ed

Tight

Oil/gas has replaced forestry and fishing as the mainstay of the economy; oil and gas exports accounting for

some 40% of total exports 1987. Between 1983 and 1986

imports rose by 28% - largely as a result of increases in domestic demand facilitated by high oil revenues.

fiscal and monetary policies during 1987 and 1988 restrained

growth in domestic demand, cutting the current account

deficit and reducing inflation. Unemployment however has reached an all time high at over 4%.

9. Norway's economic prospects will be governed largely by

the extent to which it can sustain a growing mainland

economy and reduce its over-dependence on North Sea oil. In 1989 Norway recorded its first balance of payments surplus in four years.

This was due in part to an increase in oil

production and an increase in oil prices. But an improvement in the mainland trade balance made a significant contribution to the improved figures.

10. Wage costs are lower than the country's main trading

partners. At the same time, manufacturing industry experienced an increase in productivity in 1989 by as much

as 5.7%. Consumer prices rose by 4.6% in 1989. increase in 1990 is expected to be around 4%.

The

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