Outlook for the Norwegian Economy
Deputy Governor Jan F. Qvigstad Sparebank 1, Fredrikstad
4 November 2009
Inflation
Moving 10-year average
1)and variation
2)in CPI
3). Per cent. 1980 – 2009
0 2 4 6 8 10 12 14
0 2 4 6 8 10 12 14
1980 1985 1990 1995 2000 2005
CPI Inflation target
Sources: Statistics Norway and Norges Bank 1) The moving average is calculated 7 years back and 2 years ahead
2) The band around the CPI is the variation in the CPI adjusted for tax changes and excluding energy products in the average period, measured by +/- one standard deviation
3) Estimate based on projections for 2009 – 2011 from Monetary Policy Report 3/09
Credit risk for selected banks
Measured by CDS spreads. Basis points.
1 January 2007 – 22 October 2009
0 100 200 300 400 500 600 700
0 100 200 300 400 500 600 700
Jan-07 Oct-07 Jul-08 Apr-09
Citigroup JP Morgan
Sources: Bloomberg, Thomson Reuters and Norges Bank
0 1 2 3 4
0 1 2 3 4
Jan-07 Oct-07 Jul-08 Apr-09
Norway 2) US
Euro area
Money market spreads 1)
5-day moving average. Percentage points.
5 January 2007 – 22 October 2009
1) Spread between 3-month money market rate and market key rate expectations
2) Norges Bank’s projections
Indicator of world trade 1)
Index, January 2002 = 100.
January 2002 – August 2009
Sources: Thomson Reuters and Norges Bank 1) The index is constructed on the basis of the sum of exports and imports in the
US, Japan, Germany and China. The figures are converted into USD
-25 -20 -15 -10 -5 0 5 10 15 20 25
-25 -20 -15 -10 -5 0 5 10 15 20 25
2002 2004 2006 2008
OECD
Eastern Europe Asia
Latin America
Manufacturing in OECD and emerging markets
12-month change. Per cent.
January 2002 – August 2009
0 50 100 150 200 250 300
2002 2004 2006 2008
0
50
100
150
200
250
300
International equity markets
Equity prices
Index, 1 January 2007 = 100.
1 January 2007 – 22 October 2009
0 20 40 60 80 100 120
0 20 40 60 80 100 120
2007 2008 2009 2010
Euro area US
Implied volatility
Standard deviation in basis points.
5-day moving average.
5 January 2007 – 22 October 2009
0 20 40 60 80 100
0 20 40 60 80 100
2007 2008 2009
Euro area US
Source: Thomson Reuters
Oil price (Brent Blend)
In USD per barrel.
Spot and futures prices
0 20 40 60 80 100 120 140 160
0 20 40 60 80 100 120 140 160
2002 2005 2008 2011
Brent Blend 22 October 11 June
50 150 250 350 450 550 650
50 150 250 350 450 550 650
2002 2005 2008 2011
Copper Cotton Aluminium Wheat
Sources: Thomson Reuters and Norges Bank
Commodity prices
In USD. Index.
Spot and futures prices
0 1 2 3 4 5 6 7 8
2000 2002 2004 2006 2008 2010
Spare capacity Projections from EIA
Spare capacity in OPEC
Million barrels a day. Monthly figures.
January 2000 – December 2010
Crude oil and refined
product inventories, US
In billions of barrels. January 2003 – October 2009
0.80 0.85 0.90 0.95 1.00 1.05 1.10 1.15
0.80 0.85 0.90 0.95 1.00 1.05 1.10 1.15
Jan Apr Jul Oct
Min-max 2003-2008 2009
2008
Average 2003-2008
Source: Energy Information Administration (EIA)
Key rates and estimated forward rates as at 22 October 2009 1)
Per cent. 1 June 2007 – 31 December 2012
2)0 1 2 3 4 5 6 7
0 1 2 3 4 5 6 7
2007 2008 2009 2010 2011 2012
US
Euro area
1) Thin lines show estimated forward rates as at 22 October 2009. Forward rates are derived from Overnight Indexed Swap (OIS) rates
2) Daily figures from 1 June 2007 and quarterly figures from 22 October 2009 Sources: Thomson Reuters and Norges Bank
Effective exchange rates 1)
Index, week 1 2000 = 100. Weekly figures. Week 1 2000 – week 43 2009
80 100 120 140 160
80 100 120 140 160
2000 2002 2004 2006 2008
Australia New Zealand Canada
Norway
Sources: Thomsen Reuters and Norges Bank 1) A rising curve denotes a stronger exchange rate
-3 -2 -1 0 1 2
-3 -2 -1 0 1 2
2007 2008 2009 2010
Mainland Norway Trading partners
Sources: Statistics Norway and Norges Bank
GDP growth
Growth on previous quarter. Seasonally adjusted. Per cent.
2007 Q1 – 2010 Q4
Countercyclical policy using unconventional measures
expansionary fiscal policy
low key rate
extraordinary monetary policy measures
Swap arrangements
Liquidity supply
Other extraordinary measures
Norwegian State Finance Fund
Government Bond Fund
funding for export industries
Unwinding the extraordinary measures
In recent months Norges Bank has
not supplied NOK liquidity through FX swaps
not supplied liquidity through foreign exchange market
not provided krone liquidity at long maturities
Banking system liquidity normalised further
The swap arrangement is being phased out
Easing of collateral requirements will be reversed
Share of banks borrowing facilities collateralised by bank
bonds will be reduced
Petroleum investment
At constant 2006-prices. In billions of NOK. 1983 – 2012
0 20 40 60 80 100 120 140
0 20 40 60 80 100 120 140
1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
Sources: Statistics Norway and Norges Bank
Real exchange rate
Deviation from mean over the period 1970 – 2008.
Per cent. 1970 – 2009
1)-20 -15 -10 -5 0 5 10 15 20
-20 -15 -10 -5 0 5 10 15 20
1970 1975 1980 1985 1990 1995 2000 2005
Relative consumer prices Relative wages
Sources: Statistics Norway, Technical Reporting Committee on Income Settlements, Ministry of Finance and Norges Bank
1) The squares show the average for the period 16 – 22 October 2009. A rising curve indicates weaker
competitiveness
Bank credit standards for enterprises and households
Change in credit standards since previous period
1). 2007 Q4 – 2009 Q4
Source: Norges Bank
-80 -60 -40 -20 0 20 40
-80 -60 -40 -20 0 20 40
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Enterprises Households
Easing
Tightening
1) Red dots indicate expected developments and blue bars indicate actual developments
Household credit from domestic sources 1) and house prices
12-month change. Per cent. January 2002 – October 2009
-15 -10 -5 0 5 10 15 20 25
-15 -10 -5 0 5 10 15 20 25
2002 2003 2004 2005 2006 2007 2008 2009
Household credit House prices
House prices in Østfold
1) C2 Sources: Statistics Norway and the real estate industry (NEF, EFF, FINN.no og ECON Pöyry)
Household expectations
Net figures. Quarterly figures. 1992 Q4 – 2009 Q3
-10 -5 0 5 10 15 20
-20 -10 0 10 20 30 40
1992 1994 1996 1998 2000 2002 2004 2006 2008
TNS Gallup, left-hand scale
Forbrukermeteret (CCI), right-hand scale 1)
Sources: TNS Gallup, Opinion and Norges Bank 1) Quarterly figures based on monthly observations
Monthly figures for October2009
Structural non-oil deficit and expected return on the Government Pension Fund – Global
In billions of 2010-NOK. 2007 – 2012
0 20 40 60 80 100 120 140 160
0 20 40 60 80 100 120 140 160
2007 2008 2009 2010 2011 2012
Structural non-oil deficit Expected real return
Sources: Ministry of Finance and Norges Bank
LFS unemployment as percentage of labour force
Annual figures. 1971 – 2010. Projections are shown by broken lines
0 2 4 6 8 10 12 14
0 2 4 6 8 10 12 14
1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010
Sweden US Norway UK Germany
Source: OECD
Unemployment in Norway
As percentage of labour force. Seasonally adjusted.
January 2002 – October 2009
0 1 2 3 4 5 6
0 1 2 3 4 5 6
2002 2003 2004 2005 2006 2007 2008 2009
Registered unemployment
Registered unemployment in Østfold
Sources: Statistics Norway, Norwegian Labour and Welfare Administration (NAV) and Norges Bank
Annual wage growth and LFS unemployment
Per cent. 1993 – 2010
0 1 2 3 4 5 6 7 8
0 1 2 3 4 5 6 7 8
1993 1996 1999 2002 2005 2008
Annual wage growth Unemployment rate
Sources: Statistics Norway, Technical Reporting Committee on Income Settlements and Norges Bank
Inflation
12-month change. Per cent. January 2006 – December 2012
Sources: Statistics Norway and Norges Bank
-2.5 0 2.5 5 7.5
-2.5 0 2.5 5 7.5
2006 2007 2008 2009 2010 2011 2012
CPI CPIXE
Projected key policy rate in baseline scenario with fan chart
Quarterly figures. Per cent. 2007 Q1 – 2012 Q4
90% 70% 50% 30%
Source: Norges Bank
