S&P Affirms Norway's Ratings

Standard & Poor's on Thursday retained Norway's credit rating, citing resilience of the economy and strong fiscal position.

The rating was affirmed at 'AAA/A-1+' with Stable outlook. The Stable outlook reflects the assessment that rating will be supported by effective political stability and fiscal flexibility of the country, and strong net creditor position.

Further, the rating is supported by substantial wealth and per capita income. Also, the nation benefits from net external assets.

Nonetheless, relatively indebted private sector continues to be a ratings weakness. In long-term, the government's fiscal flexibility could be constrained by the burdens of an aging society, unless the authorities take further steps to reform the pension, health care, and social security systems, S&P said.

Apart from long-term fiscal risks, S&P sees risks from high real wage growth and strong kroner, as that may lead to a marked decline in external competitiveness. The second risk is that a sharp fall in house
prices could cause significant stress for the highly indebted household sector, it said.

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