The outlook for the Norwegian economy and
the business sector in southwestern Norway
Governor Svein Gjedrem
Vats, 2 October 2006
Norges Bank
Mainland GDP in Norway
Annual growth. Per cent
0
2
4
6
1990
1992
1994
1996
1998
2000
2002
2004
2006
0
2
4
6
Business climate index
Resource shortages. Smoothed. Per cent. Q1 1983 – Q2 2006
0
10
20
30
40
50
60
1983
1988
1993
1998
2003
0
10
20
30
40
50
60
Source: Statistics Norway
Norges Bank
98
100
102
104
106
108
110
112
-3
0
3
6
9
12
15
18
21
98
100
102
104
106
108
110
112
Employment in cyclical upturns
Development after the beginning of cyclical upturns.
Index, quarter 0 = 100
Q4 1991 Q4 1982 Q1 2003
Quarters
0
2
4
6
8
10
12
14
16
18
2005
2006
0
2
4
6
8
10
12
14
16
18
Q1
Jan-Aug
Number of registered foreign workers from new EU
countries.
In thousands
Source: Central Office – Foreign Tax Affairs
Norges Bank
Unemployed
In thousands. Seasonally adjusted. Monthly figures.
January 1990 – September 2006
0
1
2
3
4
5
6
7
8
9
10
1990
1992
1994
1996
1998
2000
2002
2004
2006
0
1
2
3
4
5
6
7
8
9
10
LFS unemploymentRegistered unemployed and on labour market programmes
Registered unemployed
0% 10% 20% 30% 40% 50%
Nationwide Rogaland Hordaland
Employment by industry. Hordaland, Rogaland and
nationwide.
As a percentage of total employment (2005 Q4)
Public administration and other services
Retail trade, hotel and restaurant Manufacturing Commercial services Transport, communications Construction Utilities Financial services Agriculture, forestry, fishing Extraction of oil and gas
Source: Statistics Norway
Norges Bank
REGION MIDT-NORGE Senter for Økonomisk Forskning ved NTNU
REGION NORD Kunnskapsparken Bodø Bodø REGION NORDVEST Møreforsking Molde Molde REGION INNLAND Østlandsforskning Lillehammer REGION ØST Norges Bank REGION SØRVEST IRIS Stavanger REGION SØR Agderforskning Kristiansand
Norges Bank's regional network
Region South-West:
– Solid growth, high
level of activity
– Positive outlook for all
sectors
– Increased
employment and
higher wage growth
– Solid profitability
growth
0
20
40
60
80
100
120
140
Fish farming
Production of salmon and trout. By county. 1000 tonnes.
Preliminary figures. 2005
Source: Statistics Norway
Øvrige fylker Finnmark Rogaland Nord-Trøndelag Troms Sogn og Fjordane Sør-Trøndelag Møre og Romsdal HordalandNordland Norges Bank
Prices for fresh farmed salmon
NOK per kilo
0
10
20
30
40
50
2000 U01 2001U02 2002U03 2003 U04 2004 U05 2005 U05 2006 U06
0
10
20
30
40
50
Registered unemployment – Hordaland,
Rogaland and nationwide.
Per cent. Seasonally adjusted
0
1
2
3
4
5
1999
2000
2001
2002
2003
2004
2005
2006
0
1
2
3
4
5
RogalandSources: Arbeids- og velferdsetaten, Statistics Norway and Norges Bank Hordaland
Nationwide
Norges Bank
Consumer prices (CPI)
12-month change. Per cent
-2
-1
0
1
2
3
4
5
6
2001
2002
2003
2004
2005
2006
-2
-1
0
1
2
3
4
5
6
Energy prices
12-month change. Per cent
-20
-10
0
10
20
30
40
50
2001
2002
2003
2004
2005
2006
-20
-10
0
10
20
30
40
50
Source: Statistics Norway
Norges Bank
-5
-4
-3
-2
-1
0
1
2
3
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
-5
-4
-3
-2
-1
0
1
2
3
Consumer prices
12-month change. Percent. July 2003 – August 2006
Sources: Statistics Norway and Norges Bank Goods and services produced in Norway (0,7)*
* Norges Bank’s calculations
Growth in household real disposable income
and consumption.
Per cent
-2
0
2
4
6
8
1990
1993
1996
1999
2002
2005
2008
-2
0
2
4
6
8
Real income growthReal consumption growth
Sources: Statistics Norway and Norges Bank
Norges Bank
Electricity price
NOK/MWh. January 2002 – September 2006.
Forward prices Q3 2006 – Q4 2008
0
100
200
300
400
500
600
700
2002
2003
2004
2005
2006
2007
2008
0
100
200
300
400
500
600
700
28 September 2006 22 June 2006Housing market
January 2001 – August 2006
-5
0
5
10
15
20
25
30
35
2001
2002
2003
2004
2005
2006
-5
0
5
10
15
20
25
30
35
House prices (NEF) (12-month growth in percent) Housing starts
(total over last 12 months in thousands)
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
-5
0
5
10
15
20
25
30
2000
2001
2002
2003
2004
2005
2006
-5
0
5
10
15
20
25
30
Source: Norges Bank
Total credit to non-financial corporations, Mainland-Norway, K3
Households
Total credit Mainland-Norway, (K2)
Oil price (Brent Blend) and futures prices
in USD per barrel. Daily figures. January 2002 – September 2006
15
25
35
45
55
65
75
85
2002
2003
2004
2005
2006
2007
2008
2009
15
25
35
45
55
65
75
85
25 September 2006 22 June (IR 2/06)Sources: EcoWin, ICE, Reuters and Norges Bank
Norges Bank
Average prices for crude oil and natural gas
Q1 1997 – Q2 2006
0
100
200
300
400
500
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
0
10
20
30
40
50
60
70
80
Norwegian exports of natural gas (left-hand scale)Natural gas, average of Statoil and Hydro (left-hand scale)
Oil price Brent Blend (right-hand scale)
Gas price UK (left-hand scale)
Gas priceUSD/1000Sm3
Oil price USD/barrel
Investment intentions survey. Oil and gas activities
Assumed and actual investment. In billions of NOK
Source: Statistics Norway
20
30
40
50
60
70
80
90
100
110
May
Aug
Nov
Feb
May
Aug
Nov
Feb
20
30
40
50
60
70
80
90
100
110
2002
2003
2004
2005
Previous year
Same year
Final figures
2006
2007
Norges Bank
Expected real return on the Government Pension Fund – Global
In billions of 2006-NOK. Annual figures. 2001 – 2009
0
20
40
60
80
100
120
2001
2003
2005
2007
2009
0
20
40
60
80
100
120
Premium for forward price
Expected real return (RNB 2006)
Structural, non-oil deficit
International framework conditions
0
2
4
6
8
10
1999 2000 2001 2002 2003 2004 2005 2006 2007
0
2
4
6
8
10
25Trading partners World ChinaSources: Consensus Forecasts, IMF WEO, Norges Bank
Interest rate expectations
Actual developments and expected key
rate from IR 2/06 and on 26 September
GDP growth
Volume growth in per cent on previous
year. Actual and projected
Storbritannia USA Sverige Eurosonen
0
1
2
3
4
5
6
Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10
0
1
2
3
4
5
6
Norges BankCommodity prices
USD. Indices. 1 January 2001 = 100. Daily figures.
1 January 2001 - 25 September 2006
0
100
200
300
400
500
2001
2002
2003
2004
2005
2006
0
100
200
300
400
500
Copper Nickel Aluminium Zinc3-month interest rate differential
and import-weighted exchange rate (I-44)
1)
January 2002 – December 2009
-1
0
1
2
3
4
5
2002
2003
2004
2005
2006
2007
2008
2009
85
88
91
94
97
100
103
I-44 (right-hand scale)Weighted interest rate differential (left-hand scale) 28 June 06 (IR 2/06) 28 September 06 Average 1 – 28 September
Sources: Bloomberg and Norges Bank 1)Rising curve equals appreciation
Norges Bank
26
Monetary Policy Strategy - Inflation Report 2/06
• The interest rate may gradually – in small, not too
frequent steps – be brought back towards a more
normal level.
• The Executive Board's assessment is that the sight
deposit rate should be in the interval 2¾ - 3¾ per
cent in the period to the publication of the next
Inflation Report on 1 November 2006, conditional on
economic developments that are broadly in line with
the projections.
0
1
2
3
4
5
6
7
8
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
0
1
2
3
4
5
6
7
8
Baseline scenario
Quarterly numbers
Source: Norges Bank
Norges Bank
