Chapter 1 International economy

(1)

Executive Board September 2003

Chapter 1 International economy

1.1 GDP growth

Seasonally adjusted volume growth on previous quarter. Per cent

-1 -0.5 0 0.5 1 1.5

01 Q4 02 Q1 02 Q2 02 Q3 02 Q4 03 Q1 03 Q2 -1 -0.5 0 0.5 1 1.5

Euro area US

Sweden UK

Japan 18 trading partners

Sources: EcoWin/ US Department of Commerce, SCB, National statistics, EUR-OP / EUROSTAT, Economic and Social Research Institute (ESRI) and Norges Bank

(2)

1.2 Quarterly change in US GDP growth

Annualised contribution to growth in volume. Per cent.

Seasonally adjusted

-6 -3 0 3 6 9 12

2001 2002 2003

-6 -3 0 3 6 9 12 Private consumption Private investment

Stocks Net exports

Public consumption and investm. GDP

Source: Bureau of Economic Analysis

1.3 Quarterly change in GDP in Japan

Contribution to growth in volume. Per cent.

Seasonally adjusted

-2 -1 0 1 2 3 4

2000 2001 2002 2003

Private consumption Private investment

Net exports Public consumption and investm.

Stocks GDP

Source: EcoWin / Cabinet Office

(3)

Executive Board September 2003 Sources: Consensus Forecasts and Norges Bank

1.4 GDP forecasts for 2003 and the forecast spread

Percentage change on previous year. Spread in CF forecasts shaded¹⁾

0 1 2 3 4 5

Jan 02 Apr 02 Jul 02 Oct 02 Jan 03 Apr 03 Jul 03 0 1 2 3 4 5 Consensus Forecasts Norges Bank

-3 -2 -1 0 1 2 3 4

Jan 02 Apr 02 Jul 02 Oct 02 Jan 03 Apr 03 Jul 03

-3 -2 -1 0 1 2 3 4 Consensus Forecasts Norges Bank

-3 -2 -1 0 1 2 3 4

Jan 02 Apr 02 Jul 02 Oct 02 Jan 03 Apr 03 Jul 03 -3 -2 -1 0 1 2 3 4

US

Japan

Japan Euro area US

1) 2*standard deviation

0 1 2 3 4 5

Euro area

1.5 GDP forecasts for 2004 and the forecast spread

1 2 3 4 5 6

Jan 03 Mar 03 May 03 Jul 03 Sep 03

1 2 3 4 5 6 Consensus Forecasts Norges Bank

-3 -2 -1 0 1 2 3 4

-3 -2 -1 0 1 2 3 4 Consensus Forecasts Norges Bank

-1 0 1 2 3 4 5

US

Japan

Japan Euro area US

0 1 2 3 4 5

Euro area

(4)

0.2 0.3

0.5 1.5

Sweden

0.6 0.3

0.1 1.8

UK

0.6 -0.1

0.0 0.7

Euro area

-2.1 1.0

0.6 0.7

Japan

0.3 0.8

0.4 2,0

US

”Required”

growth in Q3 and Q4

2)

Growth Q2 ¹⁾ Growth

Q1¹⁾ IR2/03

1.6 GDP growth and forecasts for 2003

1)Seasonally adjusted growth on previous quarter, not annualised

2)Quarter-on-quarter growth to ensure that our projections are correct

1.7 Interest rate expectations in the US

Actual developments and expected key rate

0 2 4 6

1999 2000 2001 2002 2003 2004 2005

0 2 4 6 1 July 02 Key rate

24 Oct 02

19 June 03

Source: Norges Bank 12 Sept 03

11 Aug 03

(5)

1.8 Interest rate expectations in the euro area

Actual developments and expected key rate

0 2 4 6

1999 2000 2001 2002 2003 2004 2005

0 2 4 6 Key rate

24 Oct 02 1 July 02

19 June 03

Source: Norges Bank 12 Sept 03

11 Aug 03

1.9 Industrial output in the US, Japan and the euro area

Percentage change on 3 months earlier. 3-month moving average.

Seasonally adjusted. Volume

-5 -4 -3 -2 -1 0 1 2 3 4

1996 1997 1998 1999 2000 2001 2002 2003

-5 -4 -3 -2 -1 0 1 2 3 4

Sources: EcoWin/ Federal Reserve Board, Ministry of Economy,Trade and Industry and EUR-OP / EUROSTAT

US

Japan

Euro area

(6)

1.10 PMI industry for the US, the euro area, Germany, Sweden and the UK

Seasonally adjusted. Monthly figures

35 40 45 50 55 60 65

1998 1999 2000 2001 2002 2003

35 40 45 50 55 60 65

Sources: EcoWin / Institute for Supply Management, NTC Research Ltd. and Swedbank / I&L Euro area

Germany UK

Sweden

US

1) ISM, Manufacturing

1.11 PMI services for the US

¹⁾

, the euro area, Germany and the UK.

Seasonally adjusted. Monthly figures Monthly figures

40 45 50 55 60 65 70

1998 1999 2000 2001 2002

40 45 50 55 60 65 70

Sources: EcoWin / Institute for Supply Management and NTC Research Ltd Euro area

Germany UK

US

1) ISM, Non-manufacturing

(7)

2 4 6 8 10 12

97 98 99 00 01 02 03 2 4 6 8 10 12

1.12 Unemployment and employment.

Seasonally adjusted

121 124 127 130 133

97 98 99 00 01 02 03 37 38 39 40

Sources: EcoWin / National statistics Japan US

Euro area

a. Unemployment as a share of the labour force

US (left- hand scale)

Germany (right- hand scale) b. Employment in millions

Germany UK

1.13 Consumer confidence indicators

in the US, Germany, France, the euro area and the UK

Seasonally adjusted diffusion index. Monthly figures

0 25 50 75 100 125 150

1998 1999 2000 2001 2002 2003

-32 -22 -12 -2 8 18 28

Sources: EcoWin / the European Commission and The Conference Board Euro area

(right-hand scale) US (left-hand

scale) Germany

(right-hand scale)

UK (right-hand scale)

France (right- hand scale)

(8)

1.14 Retail trade

in the US¹⁾, the euro area, Sweden and the UK

Percentage change on same month previous year. 3-month moving average. Seasonally adjusted. Volume

-4 -2 0 2 4 6 8 10

1998 1999 2000 2001 2002 2003

Sources: EcoWin / US Dept. of Commerce, Office for National Statistics and ECB Euro area

US Sweden UK

1)Retail trade in the US is a deflated value index

1.15 Global trade indicator

Sum of exports and imports in the US, Japan and Germany, in USD.

Seasonally adjusted. Monthly figures. Annual change. Per cent

-20 -15 -10 -5 0 5 10 15 20 25

1996 1997 1998 1999 2000 2001 2002 2003

Sources: EcoWin / US Dept. of Commerce, Deutsche Bundesbank and Norwegian Ministry of Finance

(9)

The inflation outlook

1.16 Wage growth in the US, the euro area and the UK

Percentage change on same quarter previous year

0 1 2 3 4 5 6 7

1998 1999 2000 2001 2002 2003

0 1 2 3 4 5 6 7

Sources: EcoWin / National statistics US ¹⁾

Euro area, whole economy UK, whole

economy

1)Private sector excl. agriculture

(10)

1.17 International commodity prices

Trading partner currencies and USD. 1997=100. Weekly figures

60 70 80 90 100 110

1997 1998 1999 2000 2001 2002 2003

60 70 80 90 100 110 120

Sources: EcoWin, Norges Bank and The Economist USD

Trading partner currencies

1.18 Producer prices

25 trading partners

.

Percentage change on same month previous year

-3 -2 -1 0 1 2 3 4 5 6

1998 1999 2000 2001 2002 2003

-3 -2 -1 0 1 2 3 4 5 6

Sources: EcoWin and Norges Bank

-0.8 -0.4 0 0.4 0.8

Jan 02 May 02 Sep 02 Jan 03 May 03 -0.8 -0.4 0 0.4

PPI m/m 0.8

(11)

1.19 Consumer prices in the US, the euro area and the UK

Percentage change on same month previous year

0 1 2 3 4

1997 1998 1999 2000 2001 2002 2003

0 1 2 3 4

Sources: Bureau of Labor Statistics, Eurostat and Office for National Statistics

UK US

Euro area US, Fed target variable,

PCE deflator

1.20 CPI forecasts for 2003 and the forecast spread

Percentage change from previous year. Spread in CF forecasts shaded¹

0 1 2 3 4 5

-3 -2 -1 0 1 2

Jan 02 Apr 02 Jul 02 Oct 02 Jan 03 Apr 03 Jul 03 -3 -2 -1 0 1 2 Consensus Forecasts Norges Bank

-3 -2 -1 0 1 2 3 4

Jan 02 Apr 02 Jul 02 Oct 02 Jan 03 Apr 03 Jul 03 -3 -2 -1 0 1 2 3 4

US

Japan

Japan Euro area US

0 1 2 3 4

Jan 02 Apr 02 Jul 02 Oct 02 Jan 03 Apr 03 Jul 03 0 1 2 3 4 Consensus Forecasts Norges Bank

Euro area

(12)

1.21 CPI forecasts for 2004 and the forecast spread

0 1 2 3 4 5

-3 -2 -1 0 1 2

-3 -2 -1 0 1 2 Consensus Forecasts Norges Bank

-3 -2 -1 0 1 2 3 4

US

Japan

Japan Euro area US

0 1 2 3 4

0 1 2 3 4 Consensus Forecasts Norges Bank

Euro area

1.18 Key rates and expected change in selected countries

Sources: Reuters, Bloomberg and Norges Bank

1) Not adjusted for any maturity premium

n.a.

None -0.5

0.00-0.75 Switzerland

3 2 ½

-0.25 0

2.75 Canada

5 ¼ 5

None 0

4.75 Australia

n.a.

None -0.5

5.3 Iceland

3 ½ 2 ¾

None -1.00

2.75 Sweden

2 ½ 2

None -0.75

2.00 Denmark

4 ¼ 3 ¾

None -0.50

3.50 UK

2 ½ 2

None -0.75

2.0 Euro area

5 0 1

Expected level in 3 months 12 months¹⁾

(DEC.03) (SEP.04)

5 ¾ None

-0.75 5.00

New Zealand

0 None

0 Towards zero

Japan

1 ¾ Ingen

-0.25 1.00

USA

Change since Executive Board meeting 13.08.03 Change

since 01.01.03 Key rate

(13)

Sweden, Denmark and Finland

1.23 GDP growth

Seasonally adjusted volume growth on previous quarter

-1 -0.5 0 0.5 1 1.5 2

01 Q4 02 Q1 02 Q2 02 Q3 02 Q4 03 Q1 03 Q2 -1 -0.5 0 0.5 1 1.5 2 Sweden

Denmark Finland

Sources: EcoWin / National statistics

(14)

1.24 Manufacturing and mining output

Percentage change on same month previous year. Seasonally adjusted. 3-month moving average

-5 0 5 10 15 20

1995 1997 1999 2001 2003

-15 -10 -5 0 5 10 15 20

Sources: SCB / Statistics Finland / Statistics Denmark Sweden

Denmark Finmark (incl. power plants)

1.25 Retail trade

Volume. Percentage change on same month previous year.

Seasonally adjusted 3-month moving average

-3 0 3 6 9

1995 1996 1997 1998 1999 2000 2001 2002 2003 -3 0 3 6 9

Denmark Finland

(15)

1.25 Retail trade

Volume. Percentage change on same month previous year Seasonally adjusted. 3-month moving average

-3 0 3 6 9

1995 1996 1997 1998 1999 2000 2001 2002 2003 -3 0 3 6 9

Denmark Finland

1.26 Consumer prices

Percentage rise on same month previous year

0 1 2 3 4

1995 1996 1997 1998 1999 2000 2001 2002 2003 0 1 2 3 4

Sources: SCB / Statistics Finland / Statistics Denmark Denmark,

HICP Sweden,

UND1X

Finland, HICP

(16)

1.27 Key rates

Daily figures

0 2 4 6 8 10

1995 1996 1997 1998 1999 2000 2001 2002 2003

0 2 4 6 8 10

Sources: EcoWin/Hanson & Partners AB.

Denmark Sweden

Oil

(17)

1.28 Oil price Brent Blend

USD per barrel. Daily figures

0 10 20 30 40

Jan 02 Apr 02 Jul 02 Oct 02 Jan 03 Apr 03 Jul 03 0 10 20 30 40

Sources: Norges Bank, Telrate and IPE

1.29 Oil price Brent Blend

0 10 20 30 40

1999 2000 2001 2002 2003 2004

0 10 20 30 40

Sources: Norges Bank, Telrate and IPE Futures prices

15 September

Assumption IR 2/03

(18)

1.30 Futures prices from 8 January and 29 August 2003

Same spot price both days: USD 29.99 dollar per barrel

20 22 24 26 28 30 32

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 20 22 24 26 28 30 32

Futures prices January 2003

Futures prices August 2003

Source: International Petroleum Exchange Number of months to delivery

USD per barrel.

1.31 OPEC's reference price with price band

10 15 20 25 30 35 40

Jan 02 Apr 02 Jul 02 Oct 02 Jan 03 Apr 03 Jul 03

10 15 20 25 30 35 40

Source: EcoWin

(19)

1.32 OPEC 10 output and quotas

20 22 24 26 28 30

1998 1999 2000 2001 2002 2003 2004

20 22 24 26 28 30

Sources: Bloomberg, International Energy Agency and Norges Bank OPEC's quota

OPEC output

In million barrels per day

Call on OPEC

1.33 Oil production in Iraq, Venezuela and Nigeria

In million barrels per day. Monthly figures

0 1 2 3 4

2001 2002 2003

0 1 2 3 4

Source: International Energy Agency Iraq

Venezuela Nigeria

(20)

260 280 300 320 340 360

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 260 280 300 320 340 360

500 520 540 560 580 600 620 640

1999 2000 2001 2002 2003

Source: US Department of Energy

1.34 Stocks of crude oil in the US

In millions of barrels. Weekly figures

2003

Highest and lowest values in the last five years

Strategic reserves

Executive Board September 2003 Source: US Department of Energy

1.35 Stocks of refined products in the US

In million barrels. Weekly figures

550 600 650 700 750 800

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 550 600 650 700 750 800

2003

Highest and lowest values in the last five years

(21)

1.36 Global production and demand, last 10 quarters

72 73 74 75 76 77 78 79 80

01 Q1 01 Q2 01 Q3 01 Q4 02 Q1 02 Q2 02 Q3 02 Q4 03 Q1 03 Q2 -2 -1 0 1 2 3 4 5 6

Source: International Energy Agency Demand

Production

Production - demand (right-hand scale)

1.37 The oil price and the difference between production and demand

Quarterly figures. In million barrels per day

0 5 10 15 20 25 30 35

1999 2000 2001 2002 2003

-2 -1 0 1 2 3 4 5 Oil price (Brent)

Production - demand (right-hand scale)

Source: International Energy Agency

USD per barrel.

(22)

1.38 Probability for the oil price in June 2004 at 12 September 2003

USD per barrel - West Texas Intermediate

0 1 2 3 4 5 6 7 8 9

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70

0 1 2 3 4 5 6 7 8 9

Probabilityper USD Futures price for

June 2004: 26,59

50 % 50 %

Sources: NYMEX and International Petroleum Exchange

1.39 Probability for the oil price in December 2004 at 12 September 2003

USD per barrel - West Texas Intermediate

0 1 2 3 4 5 6 7 8 9

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70

0 1 2 3 4 5 6 7 8 9

Probabilityper USD Futures price for

December 2004: 25,52

49 % 51 %

Sources: NYMEX and International Petroleum Exchange