1. Outlook for the Norwegian Economy
Deputy Governor Jan F. Qvigstad
Sparebank 1, Fredrikstad
4 November 2009
2. Inflation
Moving 10-year average1) and variation2) in CPI3). Per cent. 1980 – 2009
14 14
12 12
CPI Inflation target
10 10
8 8
6 6
4 4
2 2
0 0
1980 1985 1990 1995 2000 2005
1) The moving average is calculated 7 years back and 2 years ahead Sources: Statistics Norway and Norges Bank
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
2
3. Credit risk for selected Money market
banks spreads1)
Measured by CDS spreads. Basis 5-day moving average. Percentage
points. points.
5 January 2007 – 22 October 2009
1 January 2007 – 22 October 2009
700 700 4 4
Citigroup Norway 2)
600 JP Morgan 600 US
3 Euro area 3
500 500
400 400
2 2
300 300
200 200
1 1
100 100
0 0 0 0
Jan-07 Oct-07 Jul-08 Apr-09 Jan-07 Oct-07 Jul-08 Apr-09
1) Spread between 3-month money market rate and market key rate
expectations
2) Norges Bank’s projections Sources: Bloomberg, Thomson Reuters and Norges Bank
3
4. Indicator of world Manufacturing in OECD
trade1) and emerging markets
Index, January 2002 = 100. 12-month change. Per cent.
January 2002 – August 2009 January 2002 – August 2009
300 300 25 25
20 20
250 250 15 15
10 10
200 200
5 5
150 150 0 0
-5 -5
100 100 -10 OECD -10
Eastern Europe
-15 -15
50 50 Asia
-20 Latin America -20
0 0 -25 -25
2002 2004 2006 2008 2002 2004 2006 2008
1) The index is constructed on the basis of the sum of exports and imports in the
Sources: Thomson Reuters and Norges Bank
US, Japan, Germany and China. The figures are converted into USD
4
5. International equity markets
Equity prices Implied volatility
Index, 1 January 2007 = 100. Standard deviation in basis points.
5-day moving average.
1 January 2007 – 22 October 2009
5 January 2007 – 22 October 2009
120 120 100 100
100 100 Euro area US
80 80
80 80
60 60
60 60
Euro area 40 40
40 40
US
20 20 20 20
0 0 0 0
2007 2008 2009 2010 2007 2008 2009
Source: Thomson Reuters
5
6. Oil price (Brent Blend) Commodity prices
In USD per barrel. In USD. Index.
Spot and futures prices Spot and futures prices
160 160 650 650
Copper
Brent Blend
140 140 Cotton
550 550
22 October
120 120 Aluminium
11 June 450 Wheat 450
100 100
80 80 350 350
60 60
250 250
40 40
20 20 150 150
0 0 50 50
2002 2005 2008 2011 2002 2005 2008 2011
Sources: Thomson Reuters and Norges Bank
6
7. Spare capacity in Crude oil and refined
OPEC product inventories, US
Million barrels a day. Monthly
figures. In billions of barrels. January 2003 –
January 2000 – December 2010 October 2009
8 1.15 1.15
Spare capacity
7 1.10 1.10
Projections from
6 EIA
1.05 1.05
5
1.00 1.00
4
0.95 0.95
3
0.90 0.90
2
Min-max 2003-2008
0.85 2009 0.85
1 2008
Average 2003-2008
0 0.80 0.80
2000 2002 2004 2006 2008 2010 Jan Apr Jul Oct
Source: Energy Information Administration (EIA)
7
8. Key rates and estimated forward rates as at
22 October 20091)
Per cent. 1 June 2007 – 31 December 20122)
7 7
6 6
US
5 5
Euro area
4 4
3 3
2 2
1 1
0 0
2007 2008 2009 2010 2011 2012
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
8
9. Effective exchange rates1)
Index, week 1 2000 = 100. Weekly figures. Week 1 2000 – week 43 2009
160 160
Australia
New Zealand
140 140
Canada
Norway
120 120
100 100
80 80
2000 2002 2004 2006 2008
1) A rising curve denotes a stronger exchange rate Sources: Thomsen Reuters and Norges Bank
9
10. GDP growth
Growth on previous quarter. Seasonally adjusted. Per cent.
2007 Q1 – 2010 Q4
2 2
Mainland Norway
1 1
Trading partners
0 0
-1 -1
-2 -2
-3 -3
2007 2008 2009 2010
Sources: Statistics Norway and Norges Bank
10
11. 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
11
12. 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
12
13. Petroleum investment
At constant 2006-prices. In billions of NOK. 1983 – 2012
140 140
120 120
100 100
80 80
60 60
40 40
20 20
0 0
1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
Sources: Statistics Norway and Norges Bank
13
14. Real exchange rate
Deviation from mean over the period 1970 – 2008.
Per cent. 1970 – 20091)
20 20
15 Relative consumer prices Relative wages 15
10 10
5 5
0 0
-5 -5
-10 -10
-15 -15
-20 -20
1970 1975 1980 1985 1990 1995 2000 2005
1) The
squares show the average for the period 16 – 22
October 2009. A rising curve indicates weaker Sources: Statistics Norway, Technical Reporting Committee on
competitiveness Income Settlements, Ministry of Finance and Norges Bank
14
15. Bank credit standards for enterprises and
households
Change in credit standards since previous period1). 2007 Q4 – 2009 Q4
40 40
Enterprises Households
20 20
Easing
0 0
-20 Tightening -20
-40 -40
-60 -60
-80 -80
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
1) Red dots indicate expected developments and blue bars indicate actual developments Source: Norges Bank
15
16. Household credit from domestic sources1)
and house prices
12-month change. Per cent. January 2002 – October 2009
25 25
20 20
15 15
10 10
5 5
0 0
Household credit
-5 -5
House prices
-10 House prices in Østfold -10
-15 -15
2002 2003 2004 2005 2006 2007 2008 2009
1) C2 Sources: Statistics Norway and the real estate industry (NEF EFF FINN.no og ECON Pöyry)
, ,
16
17. Household expectations
Net figures. Quarterly figures. 1992 Q4 – 2009 Q3
40 20
Monthly figures for October2009
30 15
20 10
10 5
0 0
TNS Gallup, left-hand scale
-10 -5
Forbrukermeteret (CCI), right-hand scale
1)
-20 -10
1992 1994 1996 1998 2000 2002 2004 2006 2008
1) Quarterly figures based on monthly observations Sources: TNS Gallup, Opinion and Norges Bank
17
18. Structural non-oil deficit and expected return
on the Government Pension Fund – Global
In billions of 2010-NOK. 2007 – 2012
160 160
140 Structural non-oil deficit 140
120 Expected real return 120
100 100
80 80
60 60
40 40
20 20
0 0
2007 2008 2009 2010 2011 2012
Sources: Ministry of Finance and Norges Bank
18
19. LFS unemployment as percentage of labour
force
Annual figures. 1971 – 2010. Projections are shown by broken lines
14 14
Sweden US Norway UK Germany
12 12
10 10
8 8
6 6
4 4
2 2
0 0
1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010
Source: OECD
19
20. Unemployment in Norway
As percentage of labour force. Seasonally adjusted.
January 2002 – October 2009
6 6
5 5
4 4
3 3
2 Registered unemployment
2
1 Registered unemployment in Østfold
1
0 0
2002 2003 2004 2005 2006 2007 2008 2009
Sources: Statistics Norway, Norwegian Labour and Welfare Administration (NAV) and Norges Bank
21. Annual wage growth and LFS unemployment
Per cent. 1993 – 2010
8 8
Annual wage growth Unemployment rate
7 7
6 6
5 5
4 4
3 3
2 2
1 1
0 0
1993 1996 1999 2002 2005 2008
Sources: Statistics Norway, Technical Reporting Committee on Income Settlements and Norges Bank
21
22. Inflation
12-month change. Per cent. January 2006 – December 2012
7.5 7.5
CPI CPIXE
5 5
2.5 2.5
0 0
-2.5 -2.5
2006 2007 2008 2009 2010 2011 2012
Sources: Statistics Norway and Norges Bank
22
23. Projected key policy rate in baseline
scenario with fan chart
Quarterly figures. Per cent. 2007 Q1 – 2012 Q4
9 9
8 90% 70% 50% 30% 8
7 7
6 6
5 5
4 4
3 3
2 2
1 1
0 0
2007 2008 2009 2010 2011 2012
Source: Norges Bank
23
24. Outlook for the Norwegian Economy
Deputy Governor Jan F. Qvigstad
Sparebank 1, Fredrikstad
4 November 2009