The economic outlook
Governor Øystein Olsen Norges Bank
12 April 2012
Global trade imbalances
Current account as a percentage of world GDP¹⁾
-1.0 -0.5 0.0 0.5 1.0
-1.0 -0.5 0.0 0.5 1.0
2000 2002 2004 2006 2008 2010
Advanced economies Emerging economies
Sources: IMF and Norges Bank 1) 10-year moving average
Capital market failure
Yield on 10-year government bonds. Percent.
0 3 6 9 12 15 18 21 24
0 3 6 9 12 15 18 21 24
1990 1994 1998 2002 2006 2010
Greece Italy Spain Portugal Germany
Sources: Eurostat, Thomson Reuters, IMF and Norges Bank
Current account for selected countries
As a percentage of GDP. Average 1999 – 2011
-10 -8 -6 -4 -2 0 2 4
-10 -8 -6 -4 -2 0 2 4
Portugal Greece Spain US UK Italy Japan Germany China
Sources: IMF and Norges Bank
Current account and fertility rate
Current account¹⁾ average 1999 – 2011. Fertility rates 2009
-13 14
1.1 2.4
US China
Norway
Japan Germany
UK
Portugal Italy Spain
Greece
Fertility rate
Current acount
1) Current account as a percentage of GDP Sources: IMF, OECD, World Bank and Norges Bank
Government Pension Fund Global
In billions of NOK. Value at the start of the year
0 500 1,000 1,500 2,000 2,500 3,000 3,500
0 500 1,000 1,500 2,000 2,500 3,000 3,500
2001 2003 2005 2007 2009 2011
Sources: Ministry of Finance and NBIM
The world’s economic geography is changing
Growth in GDP¹⁾ and real return on GPFG²⁾. Percent.
0 1 2 3 4 5 6 7
0 1 2 3 4 5 6 7
1998 2000 2002 2004 2006 2008 2010
Advanced economies Emerging economies
Real return GPFG
1) GDP weights. 10-year moving average. IMF estimates for 2010 and 2011 2) Government Pension Fund Global . Annualised growth (real return) since 1998
Sources: IMF and Norges Bank
Risk-free returns have fallen
Real return on 10-year government bonds. Percent
1998 2000 2002 2004 2006 2008 2010 2012
-1 0 1 2 3 4 5
-1 0 1 2 3 4 5
US¹⁾ UK²⁾
1) Treasury Inflation Protected Securities
2) Index-linked Gilts Sources: Bloomberg and Norges Bank
Estimates of real return
Percent
2001
40% equities 60% bonds
2012
60% equities 40% bonds
Return on equities 7½ 4¼
Return on bonds 3 1
Return GPFG 4 ¾ 3
Favourable timing for transition to 3 percent
Structural non-oil deficit. Constant 2012 prices. In billions of NOK
0 20 40 60 80 100 120 140
0 20 40 60 80 100 120 140
2001 2004 2007 2010 2013
Historical deficit 4 %
3 %
Sources: Ministry of Finance and Norges Bank
Expected key rates¹⁾
Percent
0 1 2 3 4 5 6
0 1 2 3 4 5 6
2008 2009 2010 2011 2012 2013 2014 2015
US
Euro area²⁾
UK
Estimated forward rates MPR 1/12
Sources: Bloomberg and Norges Bank 1) Based on Overnight Index Swap rates (OIS). Daily figures from 1 July 2008 and quarterly figures from 2012 Q1
2) EONIA in euro area
Two-speed development in Norway
Output growth. Manufacturing and construction
Past 3 months and 6 months ahead. Annualised. Percent
Source: Norges Bank’s regional network
-10 -8 -6 -4 -2 0 2 4 6 8 10
-10 -8 -6 -4 -2 0 2 4 6 8 10
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Domestically oriented manufacturing Export industry
Suppliers to the petroleum industry Construction
Inflation
Moving 10-year average and variation in CPI
0 2 4 6 8 10 12 14
0 2 4 6 8 10 12 14
1981 1986 1991 1996 2001 2006 2011
Variation CPI
Inflation target
Sources: Statistics Norway and Norges Bank
Projected key policy rate in MPR 1/12
Percent. Baseline scenario in the Monetary Policy Report, March
0 1 2 3 4 5 6 7
0 1 2 3 4 5 6 7
2008 2009 2010 2011 2012 2013 2014 2015
Source: Norges Bank 30% 50% 70% 90%
