The only major complaint tourists have after visiting Norway is that it's expensive. "How can the Norwegians afford it?" many baffled visitors ask. The first reason is the locals mostly do their eating and drinking at home. The second is that they earn a lot more money than, say, the British or Americans. While the average full-time US income is US$39,336 (Dh144,485) a year, in Norway it is a whopping $67,543.
Norwegians do fret about the recession, but it is hard to get too worried when your government is running a surplus worth 10 per cent of GDP, against a deficit of more than 10 per cent in the US and 13 per cent in the UK. With a strong currency and AAA credit rating, social democratic Norway is the land recession forgot. So where did it all go right? Half a century ago, the country was a poor European backwater, but in 1969 it discovered its first North Sea oil field and everything changed.
Its energy sector is now worth almost one quarter of the total GDP, generates nearly one third of all government revenue and makes up 50 per cent of the country's exports. In a population of just under 5 million, the money goes a long way. Norway also has plentiful gas supplies, and exports the lot, using hydroelectric power to heat and light its own homes. To their surprise and mild shame, Norwegians have suddenly found that they are highly prosperous. The country's total GDP recently outstripped that of Sweden, which has double the population.
No wonder the country's Scandinavian neighbours refer to Norwegians as "sheikhs on skis". Unlike many countries, Norway has saved rather than squandered its black gold bonanza, says Kyrre Aamda, the chief economist at the Norwegian bank DnB Nor. "The government has a big stake in Norwegian oil companies, owning around two thirds of oil giant Statoil, and taxes oil revenues at a high marginal rate of 78 per cent. This brings a lot of money in, but we are spending as little of it as possible." Norway invests its surplus oil revenues in a sovereign wealth fund that has grown to become the second-largest pension fund in the world, worth about $440 billion.
"If we spent the oil fund, Norway would become even more expensive and nobody would buy our exports. We are saving it instead, to meet welfare and pension payments after the oil runs out." Unlike neighbouring Iceland, Norway wisely avoided the excesses of the financial services splurge. "We had a banking crisis in the 1990s. Many of our senior bankers went through that, and this stopped them from getting too carried away during the boom years," Mr Aamda says.
The country's large state sector has also helped to see it through the financial crisis. The state employs more than 30 per cent of the workforce, and when private employment fell at the start of the credit crunch, public sector recruitment rose to plug the gap. Just 2.2 per cent of Norwegians were unemployed in May, up from 2.1 per cent a year earlier, compared with the EU average of 10 per cent. No wonder Swedes are flocking to work in Oslo's cafes, shops and restaurants. Property prices have shot up in recent years, but remain affordable. Eight out of 10 Norwegians own their homes, compared with just 50 per cent in Denmark and Sweden, says Rolf Mæhle, deputy director of the trade organisation Finance Norway.
"High employment levels, low interest rates, tax relief on mortgage interest, and the fact that only a small proportion of our population live in cities have kept property affordable. Oslo is our largest city with a population of just 545,000; most people are spread throughout the countryside." More than half of the population own or have access to a cabin in the mountains or by the sea, where they can indulge their love of fresh air and nature (even if most cabins are wired up with under-floor heating and satellite TV these days).
Prosperity is slowly changing the Norwegian mentality, says Roald Fischer, who works in Oslo's financial district. "Flashing your money around has always been disliked in Norway, but that has changed slightly in recent years. People aren't so ashamed of being well off anymore." The government is battling to prevent the gap between rich and poor widening, as is the case in many Western countries.
"We have one of the lowest differences between high and low salaries in the world. The government has a big stake in many large companies, and stops them from paying senior executives too much. If you want to earn a really big salary, you have to emigrate." The government interferes in the boardroom to a degree that would be unacceptable in most countries. It recently introduced a law insisting that 40 per cent of company directors are female, and threatened to close down companies that didn't comply.
"Norwegians like to joke that we are the last socialist nation on earth, except we're not really joking," Mr Fischer says. Norwegian mothers enjoy the best statutory maternity benefits in the world. Women can take 12 months off work at 80 per cent pay, or 10 months on full pay. Fathers also enjoy generous paternity leave benefits. Norwegians might be happy to rely on the state, but they like to be independent from everybody else, regularly voting to stay out of the EU and euro. This go-it-alone attitude has hardened since the eurozone sovereign default crisis. There is one cloud hanging over the glittering Norwegian fjords. Oil production is set to peak, Mr Aamda says.
"We only have 10 years at today's production levels, followed by another 25 years of diminishing production, although we still have gas reserves for another 100 years." There is a heated debate over what to do when the oil runs out. Norway has a highly educated population, but its high costs deter foreign investment, and its oil wealth and heavy state regulation inhibits home-grown entrepreneurship.
"There is no strategy for life after oil," he says. "It would be very difficult to pick industrial winners to invest in. Our main plan is not to spend all the revenue. The decline in oil revenues will be slow, and that should give us enough time to adjust." @Email:pf@thenational.ae
How much do leading UAE’s UK curriculum schools charge for Year 6?
- Nord Anglia International School (Dubai) – Dh85,032
- Kings School Al Barsha (Dubai) – Dh71,905
- Brighton College Abu Dhabi - Dh68,560
- Jumeirah English Speaking School (Dubai) – Dh59,728
- Gems Wellington International School – Dubai Branch – Dh58,488
- The British School Al Khubairat (Abu Dhabi) - Dh54,170
- Dubai English Speaking School – Dh51,269
*Annual tuition fees covering the 2024/2025 academic year
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
The more serious side of specialty coffee
While the taste of beans and freshness of roast is paramount to the specialty coffee scene, so is sustainability and workers’ rights.
The bulk of genuine specialty coffee companies aim to improve on these elements in every stage of production via direct relationships with farmers. For instance, Mokha 1450 on Al Wasl Road strives to work predominantly with women-owned and -operated coffee organisations, including female farmers in the Sabree mountains of Yemen.
Because, as the boutique’s owner, Garfield Kerr, points out: “women represent over 90 per cent of the coffee value chain, but are woefully underrepresented in less than 10 per cent of ownership and management throughout the global coffee industry.”
One of the UAE’s largest suppliers of green (meaning not-yet-roasted) beans, Raw Coffee, is a founding member of the Partnership of Gender Equity, which aims to empower female coffee farmers and harvesters.
Also, globally, many companies have found the perfect way to recycle old coffee grounds: they create the perfect fertile soil in which to grow mushrooms.
Bugatti Chiron Super Sport - the specs:
Engine: 8.0-litre quad-turbo W16
Transmission: 7-speed DSG auto
Power: 1,600hp
Torque: 1,600Nm
0-100kph in 2.4seconds
0-200kph in 5.8 seconds
0-300kph in 12.1 seconds
Top speed: 440kph
Price: Dh13,200,000
Bugatti Chiron Pur Sport - the specs:
Engine: 8.0-litre quad-turbo W16
Transmission: 7-speed DSG auto
Power: 1,500hp
Torque: 1,600Nm
0-100kph in 2.3 seconds
0-200kph in 5.5 seconds
0-300kph in 11.8 seconds
Top speed: 350kph
Price: Dh13,600,000
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
Killing of Qassem Suleimani
Killing of Qassem Suleimani
Water waste
In the UAE’s arid climate, small shrubs, bushes and flower beds usually require about six litres of water per square metre, daily. That increases to 12 litres per square metre a day for small trees, and 300 litres for palm trees.
Horticulturists suggest the best time for watering is before 8am or after 6pm, when water won't be dried up by the sun.
A global report published by the Water Resources Institute in August, ranked the UAE 10th out of 164 nations where water supplies are most stretched.
The Emirates is the world’s third largest per capita water consumer after the US and Canada.
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
More from Neighbourhood Watch
More from Neighbourhood Watch:
Mohammed bin Zayed Majlis
Killing of Qassem Suleimani
The specs: 2018 BMW X2 and X3
Price, as tested: Dh255,150 (X2); Dh383,250 (X3)
Engine: 2.0-litre turbocharged inline four-cylinder (X2); 3.0-litre twin-turbo inline six-cylinder (X3)
Power 192hp @ 5,000rpm (X2); 355hp @ 5,500rpm (X3)
Torque: 280Nm @ 1,350rpm (X2); 500Nm @ 1,520rpm (X3)
Transmission: Seven-speed automatic (X2); Eight-speed automatic (X3)
Fuel consumption, combined: 5.7L / 100km (X2); 8.3L / 100km (X3)
THE SPECS
Engine: 1.5-litre, four-cylinder turbo
Transmission: seven-speed dual clutch automatic
Power: 169bhp
Torque: 250Nm
Price: Dh54,500
On sale: now
Developer: Ubisoft Montreal / Ubisoft Toronto
Publisher: Ubisoft
Platforms: Playstation 4, Xbox One, Windows
Release Date: April 10
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
