Top 10 GMAT Verbal tips for Non-native speakers

Must read article : http://www.f1gmat.com/gmat-verbal-tips-non-native-speakers#

Building Your Strength in Reading Comprehension - Tips!

Reading newspapers and books may improve your general reading habit, but not your ability to crack GMAT RC. This is because the subject matter and structure of GMAT RC passages are quite different, and therefore, the mindset with which you approach them must also be different.

The best way to get better at GMAT RC is to practice official passages using the techniques taught in the CrackVerbal RC classes. However, if you have a 3-4month plan for the GMAT and want to build your strength in RC during this time, or if you don’t want to ‘use up’ official passages, here is a great way to build your strength in Reading Comprehension. Go to resources – magazines and websites – that host passages similar to GMAT RC passages, and practice your techniques on them. Here are some sources we recommend -

• economist.com – business, technology, culture.
• historytoday.com – history
• blogs.nature.com – science
• sociology.org – social sciences

Now that you have identified WHAT to read, here is HOW you should read them -

1. Give yourself 2-3 minutes to read each passage. Don’t forget to practice the critical reading, skimming and scanning techniques taught in class.
2. Make a map. If you don’t think the first map you made was useful, review and revise it. Practice till you master the art of capturing the essentials – and only the essentials – of any passage in a map.
3. Answer the Big Picture question.All GMAT RC passages will have a big picture question. And you already know how these will be worded. So try to answer the big picture questions about the article you read – what is the central theme? what is the primary purpose?
4. Analyze the Structure. Was the article a description of something? Was it an opinion or perspective? Were there opposing viewpoints? Was it an analysis or evaluation?
5. Understand the Tone. Was it positive or negative? Did it question facts or events? Did it criticize any steps taken or conclusions formed?

Let me take an example: Work on the world’s first underground railway started in 1860 when the Metropolitan Railway began building a tunnel more than three miles long from Paddington to Farringdon Street. It was largely financed by the City of London, which was suffering badly from horse-drawn traffic congestion that was having a damaging effect on business. The idea of an underground system had originated with the City solicitor, Charles Pearson, who had persuaded the City Corporation to put up money and he was probably the most important single figure in the underground’s creation. The first section linked the City with the railway stations at Paddington, Euston and King’s Cross, which had been built in the previous 30 years. A deep trench was excavated by the ‘cut and cover’ method along what are now the Marylebone Road and the Euston Road and turning south-east beside Farringdon Road. Brick walls were built along the sides, the railway tracks were laid at the bottom and then the trench was roofed over with brick arches and the roads were put back on top, though the last stretch to Farringdon was left in an open, brick-lined cutting. Stations lit by gas were created at Paddington, Edgware Road, Baker Street, Great Portland Street, Euston Road and King’s Cross on the way to Farringdon. The line was opened to the public on the following day, a Saturday, and people flocked to try it out. More than 30,000 passengers crowded the stations and pushed their way into packed trains. The underground had been mocked in the music halls and derisively nicknamed ‘the Drain’. There were predictions that the tunnel’s roof would give way and people would fall into it, while passengers would be asphyxiated by the fumes, and an evangelical minister had denounced the railway company for trying to break into Hell. In fact the railway was a tremendous success and The Times hailed it as ‘the great engineering triumph of the day’. In its first year it carried more than nine million passengers in gas-lit first-class, second-class and third-class carriages, drawn by steam locomotives that belched out choking quantities of smoke. As far as the City was concerned, the corporation was able to sell its shares in the Metropolitan Railway at a profit and the underground did ease congestion for a time. A more lasting consequence was to make commuting far easier and so cause London to sprawl out even more from its centre, while the number of people actually living in the City itself declined sharply. [Source: ‘First Day of the London Tube’, Richard Cavendish, History Today Volume 63 Issue 1 2013. http://www.historytoday.com/richard-cavendish/first-day-london-tube] Take 2 minutes to read this passage and create a map. Afterwards, spend 5-6 minutes thinking about the following questions:

• What is the primary purpose of this passage?
• What is the organization of the passage?
• What is the author’s tone?
• What are the interesting words/phrases/ideas in this passage?

Here is how I would work.

• What is the primary purpose of this passage?

As I read, I realize that the article is about the origin of the London Tube. The author is not evaluating or questioning anything, but merely repeating facts. So, I would say that the primary purpose is to ‘describe the birth of the London Tube’. Now that I have this ‘pre-phrased’ answer in mind, I can eliminate other options and arrive at the right answer.

• What is the organization of the passage?

Para 1 – how the Tube originated Para 2 – the construction of the Tube Para 3 – day 1 of operation Para 4 – outcome and reception

• What is the author’s tone?

The author is reporting facts, but his tone is overall positive and approving as can be seen from the last paragraph in which he summarizes the outcome. A key indicator of tone would be ‘tremendous success’ in line 1 of paragraph 4.

• What are the interesting words/phrases/ideas in this passage?

To me, the most interesting bits in the passage are in paragraphs 3 and 4, which describe the expected and actual outcome of the London underground. This information is sufficient for me to understand the passage sufficiently for now. The rest of my work depends on the questions I am posed, and the answer choices provided. Do this exercise for 2-3 articles every day, preferably those with different themes. Over a period of time, you will see your ability to read and comprehend GMAT RC passages improving. Have questions on any part of GMAT RC? Please fill in the form and we will get back to you ASAP!

GMAT Sentence Correction - Youtube Playlist by "CrackVerbal"

Has Sentence Correction on the ‪#‎GMAT‬ been quite of a challenge for you? Here is a complete video playlist that explains & answers all Sentence Correction questions from OG 13th edition! Good luck with your #GMAT prep! http://bit.ly/18S2zMS

https://www.youtube.com/playlist?list=PLBLqNpwm1D3U9WApc7aTwzfuUiIsoO9SD

Word to Learn, Remember and Use - "Lest"

What does lest mean and when do we use it?

Lest is a very rare word and quite old fashioned. 

Most people in Britain know it, because we see it written very often in the same place - on war memorials, on statues, which have been put up so that we remember people who died in wars; and what's very often written on these statues is ‘lest we forget’! Now, what lest means is ‘so that we don't’ or ‘so that you don't’. It's a warning. It's introducing a danger to be avoided. 

Another way of putting it would be "so as to avoid". It is just a faster way of saying it. if directed at a person it would mean something more like "so that you don't" 

Example: Wear gloves so as to avoid getting caustic chemicals on your hands. 

Using "Lest" Wear gloves lest you get caustic chemicals on your hands. 

Example: Put the parking brake on so as to avoid having to chase your car down the hill. 

Using "Lest": Put the parking brake on lest you have to chase your car down the hill. 

An archaic example: "He will bear you up lest you dash your foot upon a stone" meaning: He'll carry you so you don't cut your foot on a rock. 

Understanding the difference between Verbs and Verbals (Participles)

Understanding the differences between verbs and verbals such as participles helps you write more clearly and effectively. Verbs indicate action to a reader, while participles look like verbs but are actually describing words, or adjectives. Participles usually end in -ing or -ed.

1. Differentiating Verbs and Present Participles

   • Verbs either illustrate an action, such as "walk" or "sing," or a state of being, such as "am," "is," "are," "was" and "were." Present participles generally end in -ing, appear without a helping verb before them and modify nouns, such as, "The smiling clowns wave to the children." Here, "smiling" functions as a participle, describing what kind of clown it was. The participle may appear before or after the noun and can be part of an entire phrase: "The clowns smiling from ear to ear wave to the children." In contrast, the verb reveals the action the subject performs. In this sentence, the clowns perform the action "wave." Words ending in -ing cannot be verbs unless they have a helping verb such as a linking verb before them. For instance, "The boy walking his dog" has no verb, but in the sentence "The boy was walking his dog," the phrase "was walking" is the verb.

   Understanding Past Participles

   • Past tense verbs often add -ed to the end, as in the sentences, "She burned the candle" and this passive-voice use: "The candle was burned by her." Past participles also typically end in -ed but again function as adjectives, describing nouns rather than indicating action. For example, in "The burned candle flickered," the word "burned" describes what kind of candle and functions as a participle. The action the candle performed is "flickered," which is the verb. Past participles can appear in phrases, as well: "The candle burned last Halloween smelled like pumpkin." Here, the phrase "burned last Halloween" explains which candle performed the action "smelled."
   • Read more : http://www.ehow.com/info_8577485_difference-between-participles-verbs.html

English Grammar Practice - (Subject-Verb & Pronoun-Antecedent Agreement)

Directions: In each of the following sentences, a verb is needed. Using clues from the sentence, decide whether the verb should be singular or plural. Then select the correct verb from the choices given.

1. The governor, having met with her advisers and developed a negotiating strategy for dealing with the angry workers, (was, were) finally ready to join the bargaining session.

2. Here in the deepest recesses of the ocean (is, are) some of the most mysterious creatures on Earth.

3. Either the members of the defensive squad or Coach Mayo himself (is, are) sure to have some explanation for the way the game ended.

4. The story of the four hundred members of the 29th Cavalry and their heroic exploits on several battlefields (is, are) truly remarkable.

5. The elementary school cafeteria offers twelve kinds of sandwiches, yet peanut butter and jelly (remains, remain) the most popular of all.

Directions: In each of the following sentences, a pronoun is required. Select the correct pronoun, based upon clues from the sentence.

6. According to the police officer’s testimony, someone was seen entering the bank just before the robbery carrying a red pocketbook under (her, their) arm.

7. Both of the skydivers had brought (his, their) own parachutes and safety gear in preparation for tomorrow’s jump.

8. Anyone who wants to attend next Saturday’s dance at the Rotary Club can pick up (his or her, their) ticket at the information booth on Vincy Street.

9. No one knows whether any of the churches or synagogues in town will provide space in (its, their) buildings for a homeless shelter.

10. Either Nadia or her sister didn't finish (her, their) dinner.

Answers (Highlight the text below to see and evaluate your answers)

1. Here 'Governor' is the subject, which is singular, hence we need a singular verb 'WAS'.

2. The subject of the sentence is 'Some' (indefinite pronoun), the object of the prepositional phrase that follows 'creatures' is plural, so we need a plural verb 'ARE'

3. Here we have a compound subject; hence the verb should match the subject close to the verb. Therefore we need a singular verb in this case 'IS'

4. In this sentence there are a lot of words between the subject and the verb. Start by eliminating the prepositional phrases, so the subject is 'Story', therefore we need a singular verb 'IS'

5. The subject of the second clause here is 'peanut butter and jelly', even though we have the conjunction 'and' here the subject represents only one item, hence we need a singular verb 'REMAINS'

6. In the sentence the indefinite pronoun 'someone'  is the antecedent. Remember indefinite pronouns ending with -body/-one are singular. Hence in the sentence we need a singular pronoun 'HER'.

7. In the sentence we have the indefinite pronoun 'both' as the antecedent. 'Both' is a plural, hence we need the second pronoun 'THEIR' to match the antecedent.

8. Here the antecedent is 'Anyone'. Hence we need a singular pronoun to refer 'HIS OR HER'

9. Here the antecedent is 'any' (SANAM) pronoun. The object of the prepositional phrase 'churches' is plural hence we need a plural pronoun 'THEIR'.

10.When the antecedent of a possessive pronoun is a compound subject joined by the conjunction “or,” the pronoun must agree with the term that is closest to the verb: the antecedent is considered singular when the term closest to the verb is singular and plural when the term closest to the verb is plural. Therefore, since “her sister” (the term closest to the verb) is singular, we must use the singular possessive pronoun “HER.” (Had the sentence begun “Either Nadia or her sisters didn’t finish,” we would have used the plural possessive pronoun “their” instead to agree with “her sisters.”)

English Grammar Practice - Agreement (Singular and Plural)

Directions: In each of the following sentences, a verb is needed. Using clues from the sentence, decide whether the verb should be singular or plural. Then select the correct verb from the choices given.

1. Four hundred pages (seems, seem) like an awfully long reading assignment for the holiday weekend.

2. Neither of the injured dancers (is, are) feeling well enough to perform this evening.

3. The orchestra (has, have) recently completed a successful tour of several Asian countries.

4. All of the stone masons working on the cathedral (is, are) residents of Harlem.

5. Everyone in the class (was, were) surprised at how easy the final exam was.

Answers (Highlight the text below to see and verify your answers)

1. The subject here is 'Four hundred pages', looks like a plural, but remember a subject that describes an amount is singular. Therefore a singular verb "SEEMS" in this case would be correct.

2. The subject here is ‘Neither’ an indefinite pronoun, which is singular and hence the sentence needs a singular verb "IS".

3. In this sentence the subject is the collective noun 'Orchestra'. The subject is singular in form but refers to a large group of people. In the sentence orchestra is referred as a whole doing a single action. Hence the singular verb "HAS" is needed.

4. The subject of the sentence is the indefinite pronoun 'All'. Remember 'All' is one of the SANAM Pronouns (*some, *any, *none, *all, *most). To tell if the SANAM pronoun is singular or plural you need to look at the prepositional phrase; the object of the prepositional phrase will indicate the case. In the sentence the prepositional phrase is "of the stone masons", here the object of the preposition is "masons" which is plural. Hence we need a plural verb "ARE".

5. Here the indefinite pronoun 'Everyone' is used as the subject of the sentence. All indefinite pronouns ending with -body/-one are singular. So, we need a singular verb in this sentence "WAS".

GMAT Sentence Correction Practice (10/04/15)

Qn 01
Mozart himself was a piano virtuoso, and the piano parts of his piano concerti, especially the mature work composed in 1784 and after, have astonishingly difficult finger work, that has demanded incomparable technique to produce the required elegance and precision.
A. that has demanded
B. which demanded
C. that had demanded
D. which demands
E. that is demanding

Qn 02
Extracting pure aluminum from bauxite and other ores using the Hall-Héroult process, with a vast amount of electrical energy separating the element from aluminum oxide, making aluminum an energy-dense resource with a huge carbon footprint.

A. using the Hall-Héroult process, with a vast amount of electrical energy separating the element from aluminum oxide, making

B. by means of the Hall-Héroult process, in which a vast amount of electrical energy separates the element from aluminum oxide, making

C. by means of using the Hall-Héroult process, in which a vast amount of electrical energy separates the element from aluminum oxide, is making

D. by means of the Hall-Héroult process, in which a vast amount of electrical energy separates the element from aluminum oxide, makes

E. using the Hall-Héroult process, with a vast amount of electrical energy separating the element from aluminum oxide, makes

Qn 03
The spokeswoman for the national laboratory announced that, while the lab had been operating at a loss in the 1990s, it had become profitable in 2006, and would continue to yield high profits at least until 2025.

A. had been operating at a loss in the 1990s, it had become profitable in 2006, and would continue
B. had been operating at a loss in the 1990s, although becoming profitable in 2006, and will continue
C. had been operating at a loss in the 1990s, it became profitable in 2006, continuing
D. operated at a loss in the 1990s, becoming profitable in 2006, then would continue
E. operated at a loss in the 1990s, becoming profitable in 2006, and continuing

Qn 04
Geologist Charles Lyell (1797 – 1875) believed the theologians of previous centuries had vastly underestimated the age of the Earth and that evidence will justify a much older Earth compared to what they previously expected.

A. the theologians of previous centuries had vastly underestimated the age of the Earth and that evidence will justify a much older Earth compared to what they previously expected

B. the theologians of previous centuries vastly underestimated the age of the Earth and that evidence would justify a much older Earth than was previously suspected

C. that the theologians of previous centuries vastly underestimated the age of the Earth and that evidence will justify a much older Earth compared to the previously expected

D. that the theologians of previous centuries had vastly underestimated the age of the Earth and that evidence would justify a much older Earth than was previously suspected

E. that the theologians of previous centuries vastly underestimated the age of the Earth and that evidence will justify a much older Earth than they previously suspected

Qn 05
The Federal investigators at Stapleton Industries have failed to find any evidence that has suggested that the unusually large contributions to its accounts are derived from government kickbacks, nor its officers guilty of improper relations with industry regulators.

A. that has suggested that the unusually large contributions to its accounts are derived from government kickbacks, nor its officers guilty

B. that suggests that the unusually large contributions to its accounts are derived from government kickbacks, nor its officers guilty

C. suggesting that the unusually large contributions to its accounts had been derived from government kickbacks, with its officers guilty

D. to suggest that the unusually large contributions to its accounts are derived from government kickbacks or that its officers are guilty

E. to suggest that the unusually large contributions to its accounts had been derived from government kickbacks, nor were its officers guilty

9 things successful people do before going to sleep (WEF)

The very last thing you do before bed tends to have a significant impact on your mood and energy level the following day, since it often determines how well and how much you sleep.

Successful people understand that their success starts and ends with their own mental and physical health, and that it’s almost entirely dependent upon them getting enough sleep.

That’s why bedtime routines are a key ritual for so many of them – and why the very last thing most successful people do before bed is read.

1. They read.

Experts agree that reading is the very last thing most successful people do before going to sleep.

Michael Kerr, an international business speaker and author of “You Can’t Be Serious! Putting Humor to Work,” says he knows numerous business leaders who block off time just before bed for reading, going so far as to schedule it as a “non-negotiable item” on their calendar. “This isn’t necessarily reserved just for business reading or inspirational reading. Many successful people find value in being browsers of information from a variety of sources, believing it helps fuel greater creativity and passion in their lives.”

For example, while some successful people use this time catch up on news stories from the day, skim tech blogs, or browse Reddit and Twitter, others enjoy reading fiction novels and ancient philosophy just before bed.

2. They make a to-do list.

“Clearing the mind for a good night sleep is critical for a lot of successful people,” says Kerr. “Often they will take this time to write down a list of any unattended items to address the following day, so these thoughts don’t end up invading their head space during the night.”

3. They spend time with family.

Michael Woodward, Ph.D., organizational psychologist and author of “The YOU Plan,” says it’s important to make some time to chat with your partner, talk to your kids, or play with your dog.

Laura Vanderkam, author of “What the Most Successful People Do Before Breakfast,” says this is a common practice among the highly successful. “I realize not everyone can go to bed at the same time as his or her partner, but if you can, it’s a great way to connect and talk about your days.”

4. They reflect on the day.

Kerr says many successful people take the time just before bed to reflect on, or to write down, three things they are appreciative of that happened that day. “Keeping a ‘gratitude journal’ also reminds people of the progress they made that day in any aspect of their life, which in turn serves as a key way to stay motivated, especially when going through a challenging period.”

Vanderkam adds: “Taking a few moments to think about what went right over the course of the day can put you in a positive, grateful mood.”

5. They meditate.

Many successful people use the 10 minutes before bed to meditate. Dale Kurow, a New York-based executive coach, says it’s a great way to relax your body and quiet your mind.

6. They plan out sleep.

“Much has been written around the dangers busy people face running chronic sleep deficits, so one habit I know several highly successful people do is to simply make it a priority to get enough sleep — which can be a challenge for workaholics or entrepreneurs,” Kerr says. One way to do that is to go to bed at a consistent time each evening, which is a key habit all sleep experts recommend to help ensure a healthy night’s sleep.

Vanderkam further suggests that you plan out when you’re going to wake up, count back however many hours you need to sleep, and then consider setting an alarm to remind yourself to get ready for bed. “The worst thing you can do is stay up late then hit snooze in the morning,” she says. “Humans have a limited amount of willpower. Why waste that willpower arguing with yourself over when to get up, and sleeping in miserable nine-minute increments?”

7. They unplug and disconnect from work.

Truly successful people do anything but work right before bed, Kerr says. They don’t obsessively check their email, and they try not to dwell on work-related issues.

Woodward agrees. “The last thing you need is to be lying in bed thinking about an email you just read from that overzealous boss who spends all their waking hours coming up with random requests driven by little more than a momentary impulse.” Give yourself a buffer period between the time you read your last email and the time you go to bed. The idea is to get your head out of work before you lie down to go to sleep.

8. They lie down on a positive note.

It’s easy to fall into the trap of replaying negative situations from the day that you wish you’d handled differently. Regardless of how badly the day went, successful people typically manage to avoid that pessimistic spiral of negative self-talk because they know it will only create more stress.

“Remember to take some time to reflect on the positive moments of the day and celebrate the successes, even if they were few and far between,” Woodward says.

9. They picture tomorrow’s success.

Many successful people take a few minutes before bed to envision a positive outcome unfolding for the projects they’re working on, says Lynn Taylor, a national workplace expert and author of “Tame Your Terrible Office Tyrant; How to Manage Childish Boss Behavior and Thrive in Your Job.” “For most, this is not a task or exercise; they’re wired with a gift of solid resolution skills that come naturally.”

This article is published in collaboration with Business Insider. Publication does not imply endorsement of views by the World Economic Forum.

To keep up with the Agenda subscribe to our weekly newsletter.

Author: Jacquelyn Smith joined Business Insider as the Careers Editor in February 2014.

What does it take to be a Young Global Leader? (agenda.weforum.org)

What can Mumbai slum dwellers teach us about sharing? How might robotics help a paralysed adventurer walk again? Can ethical investors improve the lives of factory workers? Over the past ten years, Young Global Leaders have pooled their creativity, skills and enthusiasm to take on some of the world’s biggest challenges. Since the World Economic Forum founded the community of Young Global Leaders in 2005 as a way of supporting exceptional leaders under 40, it has grown into a thriving global network and idea incubator. As we welcome the class of 2015, Young Global Leaders have moved to the forefront of science, business and social innovation. So what sets them apart?

For one, a proven track record as a leader combined with a willingness to learn. Adam Werbach, the co-founder of giving platform Yerdle, visited a Mumbai slum. Impressed by its sharing economy, he came up with an app that allows US users to give away items for free. Yerdle has already helped its users save $3.5 million while cutting down on waste and clutter.

Other Young Global Leaders stand out for their tremendous resilience and mental strength. Mark Pollock, who is blind and paralysed, is testing robotic legs as part of his mission to find a cure for paralysis. He is using his personal experience of a catastrophic spinal cord injury to ignite change around the world. Ashish Goyal was the first blind trader at JP Morgan and now manages a hedge fund, inspiring millions of others with his success.

For Young Global Leaders, business is about more than the bottom line. Oliver Niedermaier, the founder and CEO of TAU Investment, believes he can transform Asian garment factories through ethical finance. His private equity firm aims to improve workers’ lives and environmental conditions while delivering returns to investors. In the creative sector, Kickstarter co-founder Yancey Strickler has empowered innovators through crowdfunding. Since its launch in 2009, Kickstarter has supported more than 80,000 creative projects from documentaries to public art installations, with more than 8.2 million people pledging a total of over $1.6 billion.

Young Global Leaders continuously question traditional ideas and challenge conventional wisdom. Michelle Dipp, the founding CEO of OvaScience, is pioneering new fertility treatments. Her company uses breakthrough research in egg health to empower women while debunking harmful myths around female fertility.

On top of their individual achievements, Young Global Leaders have tapped the power of collective action. As a community, they have effectively used their collective expertise to respond to environmental and humanitarian crises. Water scarcity is one such planetary concern, with only one-third of the population expected to have enough safe drinking water by 2025. “Thirst”, a Beijing-based Young Global Leader initiative started by Mina Guli, engages and educates the next generation about water scarcity. “Table for Two” was founded in reaction to another alarming statistic: in the world today, 1 billion people are undernourished, while another 1 billion suffer from obesity. Table for Two encourages healthy eating while raising money to fight hunger. Young Global Leaders have also tackled regional crises, for example by providing scholarships for Syrian refugees through the Irada project.

These are just some examples of members who are fulfilling the community’s original vision for global collaboration and better leadership. Young Global Leaders are active in today’s most exciting and dynamic fields, from the circular economy to digital governance. Apart from the annual Young Global Leaders summit, the community includes training and development programmes as well as a multitude of self-organized events around the world. This year we will be holding the first-ever Impact Lab, a three-day, hands-on workshop in New York designed for Young Global Leaders looking to jumpstart new initiatives or refine existing ones. The workshop will culminate in a pitch-competition to a panel of potential funders.

This wealth of transformative projects is just the start. We are excited about the 187 new members joining the Young Global Leaders community this year, shaping the network with their own ideas and priorities. Their talent, dedication and energy will help us take the Young Global Leaders community into the next decade.

For a full overview of the Young Global Leaders Class of 2015 and a 10-year celebration of the Forum of Young Global Leaders, see here.

Author: John Dutton is a Director at the World Economic Forum and Head of the Forum of Young Global Leaders. 

Why Norway is not panicking about the oil price collapse? (WEF)

Norway’s petroleum sector is its most important industry. The petroleum sectoraccounts for 21.5% of its GDP, and almost half (48.9%) of total exports. In 2013 Norwaywas ranked the 15th-largest oil producer, and the 11th-largest oil exporter in the world. It is also the biggest oil producer in western Europe.

Oil is therefore regarded as a vital national resource and is the backbone of the Norwegian economy, though just like in the UK, its best years are in the past. Production levels have been dropping since the turn of the century, peaking at 3.5m barrels per day in 2001 to less than 1.9m in 2014.

Norway is not a member of theOrganisation of the Petroleum Exporting Countries(OPEC), and in principle it sets prices based on the current market. But with OPEC having a virtual monopoly on global pricing, Norway in effect remains subject to the cartel’s pricing decisions. Norway is thus vulnerable to the volatility in oil pricing, and with regard to the structure of the sector and its role in the Norwegian economy, this vulnerability is extended throughout the society as a whole.

With the unsettling and dramatic slide in oil prices since June 2014, Norway has of course been substantially affected. Two months ago, Statistics Norway cut this year’sGDP forecast from 2.1% to 1% on the back of lower prices. A few days later the central bank unexpectedly cut interest rates to an all-time low of 1.25% to help stimulate the economy. Some 12,000 jobs are being cut as the oil industry pares back about 10% of its workforce, and there are fears that nearly 30,000 more could follow.

Statoil and the oil industry

Oil in Norway is dominated by Statoil, the largely state-owned oil company, which controls about 70% of the country’s petroleum production. It reported staggering lossesin the third and fourth quarter of 2014 that were partly the result of the lower oil price – the company’s first loss since it listed on the stock market in 2001. Its share price is also down about a quarter on last summer. The majority of job losses in the sector are due to cost-cutting and reductions to capital expenditure that are aimed at steadying the ship.

Experts regard the low price as a difficulty mainly for the profitability of specific expansion projects, meaning that they could be postponed or even cancelled. High oil prices have made certain investments possible, which are now in trouble. For instance Statoil has held off on decisions on a US$6bn investment into the Snorre field in the North Sea and the huge Johan Castberg field in the Barents Sea.

Consultancy Wood Mackenzie is forecasting that petroleum investments in Norwegian waters will be down 25% this year, with foreseeable cuts in subsequent years too. There is at least one consolation for the industry: the huge Johan Sverdrup field, which is due to begin output in 2019, appears to be viable at prices beneath US$40 a barrel.

The Norwegian government also recently announced that by way of stimulus it would award a tranche of new oil and gas drilling licences next year, including opening up the first new area for exploration since the 1990s. It has also called for the sector to adapt, suggesting that the height of exploration and development has been achieved for oil exploitation, and the sector must now consolidate its position. However, so far there have been few specifics.

The national budget

Unlike in the UK, the main narrative in the Norwegian media is not about cutting producer taxes but worry about the state failing to obtain its expected revenue as outlined in the country’s budget. Some experts believe that if the trend continues the actual revenue collected for the pension fund this year could be as low as half of what was budgeted, which would doubtless be a blow.

Last month, Norwegian prime minister Erna Solberg and finance minister Siv Jensenheld a press conference on the situation, underlining that the government is prepared to take action if this becomes necessary, but that for the time being, the state budget is sufficiently capable of containing the situation. This means there are currently no plans to make cuts to the budget to cope with lower revenues.

Sovereign wealth

The big advantage that Norway has is the US$860bn (£565bn) Norwegian Government Pension Fund Global into which the oil money is deposited. Intended as an investment for future generations, it is the largest sovereign wealth fund in the world.

Norway owns an estimated 1% of global stocks and is considered to be the largest state owner of European stocks. For a country with a population just over 5m, this is a position of remarkable economic strength – thanks primarily to petroleum. The revenue of the sector is not only important as an economic boost, but also as the foundation of the Norwegian welfare state.

The government is able to spend up to 4% of the fund every year to finance its budget, albeit for investments rather than direct spending. This year, despite a substantial increase to the level of spending, it will still only run to about 3% of the total. This is also a country in which unemployment is very low – below 4%.

In short, the fall in oil prices is problematic but by no means catastrophic for Norway. The general reaction is a pragmatic one: Norway is in the hands of the global market, and will do what it can to maintain a profitable and responsible petroleum sector that serves the interests of the country. There are no illusions that the oil will last forever, or that prices must remain unnaturally high, and it is perhaps precisely these kinds of vulnerabilities that the Norwegian system safeguards against. Short-term losses are expected, but there is continued optimism for long-term gains.