Norges Bank
The economic outlook and monetary policy Governor Svein Gjedrem Oslo, 9. November 2006
Norges Bank
Terms of trade in Norway Goods. Index. 1995=1 2,5
2,5
Norway, incl oil
2
1,5
1,5
Norway, excl oil
1
0,5 1995
2
1
0,5 1997
1999
2001
2003
2005 Sources: Statistics Norway and ICE
Norges Bank
Mainland GDP Annual figures. Per cent 6
6
4
4
2
2
0
0 1990
1992
1994
1996
1998
2000
2002
2004
2006
Sources: Statistics Norway and Norges Bank
Norges Bank
Business tendency survey. Labour shortages.1) Smoothed. Per cent. 15
15
12
12
9
9
6
6
3
3
0 1983 1)
0 1987
1991
1995
Share of companies reporting that labour shortages are a production constraint.
1999
2003 Source: Statistics Norway
Norges Bank
Capacity utilisation Regional network. The share who report that they would have some or considerable problems accommodating an increase in demand. Per cent 100
80
100
80
Building and construction
60
60 Total
40
40 Services
20
0 Jan-05
20
0 May-05
Sep-05
Jan-06
May-06 Source: Norges Bank
Norges Bank
Norges Bank`s regional network
– Less spare capacity and labour shortages
REGION NORTH Kunnskapsparken Bodø Bodø
REGION NORTH – WEST
REGION CENTRAL NORWAY
Møreforsking Molde Molde
Senter for Økonomisk Forskning ved NTNU
REGION SOUTHWEST IRIS Stavanger
– In building and contruction and some corporate services, the rise in prices is accelerating – The rise is prises is moderate in retail trade – Wage growth is relatively moderate, but rising in most industries.
REGION INLAND Østlandsforskning Lillehammer REGION EAST Norges Bank REGION SOUTH Agderforskning Kristiansand
Source: Norges Bank
Norges Bank
Will the labour supply be a constraint on production/turnover if there is an unexpected increase in demand? Share ”yes” in per cent 100
80
Jan-05
Sep-05
Jan-06
Aug-06
60
40
20
0 Total
Manufacturing
Building and construction
Retail trade
Services
Public sector
Source: Norges Bank
Norges Bank
Unemployment Per cent. Seasonally adjusted 5
5
4
4
Registered unemployed
3
3 Unemployment in Region East1)
2
2 1) Norges Bank`s calculations
1 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
1
Sources: Statistics Norway, Norwegian Labour and Welfare Organisation (NAV) and Norges Bank
Norges Bank
Estimated number of employed persons not resident in Norway In thousands 70
70 "New" EU countries
60
60
"Old" EU countries Nordic countries
50
50
40
40
30
30
20
20
10
10
0
0 2004
2005
2006 Source: Norges Bank
Norges Bank
Annual wage growth1) and LFS unemployment Percent. 1993-20092)
Annual wage growth
6
6
Unemployment
4
4
2
2 1)
2)
Average for all groups. Including estimated costs of increase in number of vacation days and introduction of mandatory occupational pension. Estimates for 2006-2009
0
0 1993
1995
1997
1999
2001
2003
2005
2007
2009
Sources: Technical Reporting Committee on Income Settlements, Statistics Norway and Norges Bank
Norges Bank
Productivity Trend1). Annual growth. Per cent 6
6
5
5
4
4
3
3
2
2
1
1
0
0
1) Mainland
Norway excluding public sector, export industry, electricity supply and housing services
-1 1980
-1 1984
1988
1992
1996
2000
2004 Source: Norges Bank
Norges Bank
Real growth in household disposable income and consumption. 1)
Per cent. 1990-2009 8
8 Real income growth
Real growth in consumption
6
6
4
4
2
2
0
0 1990
1) Excluding dividends
1993
1996
1999
2002
2005
2008
Sources: Statistics Norway and Norges Bank
Norges Bank
Housing market January 2001 – October 2006 35
35 Housing starts (total over last 12 months in thousands)
30
30
25
25 House prices (12-month rise in per cent)
20
20
15
15
10
10
5
5
0
0
-5 2001
-5 2002
2003
2004
2005
2006
Sources: Association of Real Estate Agency Firms, ECON, Finn.no, Norwegian Association of Real Estate Agents and Statistics Norway
Norges Bank
Credit growth 12-month growth. Per cent 30
30 Total debt mainland enterprises, C3
25
25 Credit from domestic sources, mainland enterprises, (C2)
20 15
20 15
Credit from domestic sources, households
10
10
5
5
0
0
-5 2000
-5 2001
2002
2003
2004
2005
2006 Source: Norges Bank
Norges Bank
Rents for offices in the main Norwegian cities In thousands 2006-kroner per square meters
3000 2500
3000 Stavanger central Stavanger oil environment Tromsø
Trondheim Bergen Oslo high standard, central
2500
2000
2000
1500
1500
1000
1000
500
500
0 1996
0 1998
2000
2002
2004
2006
Soruces: OPAK and Statistics Norway
Norges Bank
Consumer prices (CPI) 12-month change. Per cent 6
6
5
5
4
4
3
3
2
2
1
1
0
0
-1
-1
-2 2001
-2 2002
2003
2004
2005
2006 Source: Statistics Norway
Norges Bank
Energy prices 12-month change. Per cent 50
50
40
40
30
30
20
20
10
10
0
0
-10
-10
-20 2001
-20 2002
2003
2004
2005
2006
Source: Statistics Norway and Norges Bank
Norges Bank
Consumer prices – adjusted for tax changes and excluding energy products 12-month change. Per cent. July 2003 – September 2006 3
3 Goods and services produced in Norway (0.7)*
2
2
1
1
0
0
-1
-1
-2
-2 Imported consumer goods(0.3)*
-3
-3
-4
-4 * Norges Bank’s calculations
-5 Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
-5
Jul-06
Sources: Statistics Norway and Norges Bank
Norges Bank
International framework conditions GDP growth Volume growth in per cent on previous year. Actual and projected 10
Actual and expected interest rate US
5 8
8
6
6
6
6
10
China
5
UK
4 World
3
3
4
4
2
Sweden
2
2
1
0 2001
2003
2005
0
0 Sep-03
2007
2
------- 27 Sept (interest rate meeting) 6 Nov 2006
25 trading partners
1999
4
Euro area
Sep-04
Sep-05
Sep-06
Sep-07
Sep-08
0 Sep-09
Sources: Consensus Forecasts, IMF WEO, Norges Bank
Norges Bank
Housing investment and GDP in US Percentage deviation from trend. 1970 Q1- 2006 Q2 8
45
Recessions
30 GDP, left-hand scale
4
15 0
0
-15
Housing investments, righthand scale
-4
-30 -8 1970
-45 1975
1980
1985
1990
1995
2000
2005
Sources: OECD and Norges Bank
1
Norges Bank
House prices and housing starts in US¹ Median price in USD. 12-month rise. Jan. 03 – Sep. 06 20
20 Existing homes
New homes
15
15
10
10
5
5
0
0
-5
-5
Housing starts
-10
-10
-15
-15 1)
3-month moving average
-20 2003
-20 2004
2005
2006 Sources: EcoWin and Norges Bank
Norges Bank
Oil price (Brent Blend) in USD per barrel 80
80 26 Oct IR 3/06
6 November
60
40
20 2003
60
40
20 2004
2005
2006
2007
2008
Sources: Reuters EcoWin, Reuters and Norges Bank
Norges Bank
Commodity prices USD. Indices. 1 January 2001 = 100. 500
500 Copper
400
400
300
300 Nickel
200
200
100
Sink
100
Aluminium
0
0
2001
2002
2003
2004
2005
2006 Source: Reuters EcoWin
Norges Bank
Investment in oil and gas recovery incl. pipeline transport. 30
Investment level in billions of NOK (constant 2003-prices) and annual growth in per cent. 1995 – 2009 Annual growth (left-hand scale)
100 90
15
80 0 70 Investment level (right-hand scale)
-15
60 50
-30 1995
1997
1999
2001
2003
2005
2007
2009
Sources: Statistics Norway and Norges Bank
Norges Bank
Expected real return on the Government Pension Fund - Global In billions of 2007-NOK. 2001 – 2010 120
120 Premium for forward price 26 Oct 2006 Expected real return (NB 2007)
90
90
Structural, non-oil deficit
60
60
30
30
0
0 2001
2003
2005
2007
2009
Sources: Ministry of Finance (National Budget 2007) and Norges Bank
Norges Bank
3-month interest rate differential and import-weighted exchange rate (I-44)1). January 2002 – December 2009 5
85
4
88 I-44 (right-hand scale)
3
91
2
94 6 Nov 06
Weighted interest rate differential (lefthand scale)
1
27 Sept. 06
0 -1 2002
97 100 103
2003
2004
1) A rising curve denotes a stronger krone exchange rate.
2005
2006
2007
2008
2009
Sources: Bloomberg and Norges Bank
Norges Bank
Domestic inflation and output gap level (lagged by 4 quarters). 1993 Q1-2009Q4 5
4 Output gap (right-hand scale)
4
2
3 0 Domestically produced goods and services (lefthand scale)
2
-2
1 0 1993
-4 1996
1999
2002
2005
2008
Sources: Statistics Norway and Norges Bank
Norges Bank
Sight deposit rate in the baseline scenario 1999 Q1 –2009 Q4 8
8
7
7
6
6
5
5
4
4
3
3
2
2
1
1
0 1999
0 2001
2003
2005
2007
2009 Source: Norges Bank
Norges Bank
Sight deposit rate with fan chart. Quarterly figures 9
9 30% 50% 70% 90%
8
8
7
7
6
6
5
5
4
4
3
3
2
2
1
1
0 2004
0 2005
2006
2007
2008
2009 Source: Norges Bank
