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Led by President Donald Trump, since 2016, the United States has exerted enormous pressure on other NATO countries.
Formally, members have only pledged to “aspire to move forward” toward the goal of spending 2 percent of gross domestic product (GDP) on defense. But the president viewed the monetary target as a minimum requirement and suggested that the United States may not represent the escaping member states.
Until recently, Norway was among the countries that were far from reaching the two percent target. In 2018, 1.73 percent of Norway’s GDP went to defense.
After Norway changed its defense spending reporting method in 2019, the proportion increased to 1.80 percent, according to NATO figures.
By 2020 Norway is ready to make another more powerful trophy. Not because we spend much more money on defense, but because of the serious setback that has affected the Norwegian economy.
2 percent
Norway’s total defense spending is estimated at NOK 67 billion in 2020, according to figures the Defense Ministry sent to NATO. At the same time, the latest Norwegian Statistics forecasts show that GDP will decline by 4 percent.
If the forecasts are fulfilled, Norway ends up spending around 1.94 percent of GDP on defense in 2020, according to Aftenposten’s calculations.
Norway’s total defense spending is estimated at NOK 67 billion in 2020.
Norway’s GDP amounted to NOK 3,537.6 billion in 2019, according to the latest updated figures from Statistics Norway.
The agency estimates that GDP will decrease by 4 percent in real terms in 2020, while the IMF estimates that it will fall by 6.3 percent.
The agency has not released any price deflator for GDP in 2020. Therefore, the Consumer Price Index (CPI) has been used as a starting point to calculate GDP to NOK 2020. Statistics Norway estimates that the CPI will end at 1.2 percent, while the IMF estimates 2.4 percent. Aftenposten has used the average of these forecasts (1.8 percent) in the calculations.
With Statistics Norway’s projections, GDP will amount to NOK 3.46 billion (2020).
With IMF projections, GDP ends at NOK 3380 billion (2020).
The share of defense spending in GDP will be 1.94 percent and 1.98 percent, respectively.
The IMF is more negative on the growth outlook than Statistics Norway and estimates that GDP will fall 6.3 percent this year. Paradoxically, it will bring Norway even closer to the two percent target. If the IMF meets the forecasts, Norway will spend 1.98 percent of GDP on defense this year.
The IMF emphasizes that the estimates are unusually high. Fund economists have assumed a gradual reopening beyond 2020. If new waves of infection and new closings occur, the drop in GDP may be larger than expected. The evolution of Norway’s total GDP will also be affected by the projection. cut in oil production announced this week.
“We risk reaching the maximum percentage target before we know it,” Defense Minister Frank Bakke-Jensen told Aftenposten.
