Economic outlook for Norwegian...

ECONOMIC OUTLOOK

FOR NORWEGIAN

INDUSTRY

GOVERNOR ØYSTEIN OLSEN

4 April 2017

Agenda

Oil prices putting a brake on growth

– The economy has turned the corner in Norway…

– … and in other countries?

How far have the structural adjustments come?

2

Norway: The economy has turned the corner

0

1

2

3

4

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

GDP mainland Norway.1) Volume. Annual growth. Percent

1) Projections for 2017-2020 from MPR 1/17.

Sources: Statistics Norway and Norges Bank

3

Oil investment and petroleum revenue spending

In billions of 2016 NOK. Average annual change

Sources: Ministry of Finance, Statistics Norway and Norges Bank

-30

-20

-10

0

10

20

30

2001-2013 2013-2016

Spending

Investment

4

Less room for growth in petroleum revenue

spending

Constant 2017 prices. In billions of NOK

0

50

100

150

200

250

300

350

2002 2005 2008 2011 2014 2017 2020

Structural non-oildeficit

4% of the GPFG

3% of the GPFG

Sources: Ministry of Finance and Norges Bank 5

Monetary policy has also made a contribution

6

Key policy rate. Percent

Source: Norges Bank

0

1

2

3

4

5

6

7

2008 2010 2012 2014 2016 2018

Projection, March 2017

Projection, March 2014

Key policy rate

Oil price and krone exchange rate

7

Oil price1) and import-weighted exchange rate index2)

1) Brent blend. USD/barrel.

2) A positive slope denotes a stronger krone exchange rate.

Sources: Thomson Reuters and Norges Bank

85

90

95

100

105

110

11520

40

60

80

100

120

2014 2015 2016 2017

Oil price (left-handscale)

I-44 (right-handscale)

Improved competitiveness

Norwegian labour costs, relative to trading partners’ labour costs1). Index2)

80

90

100

110

120

130

140

1995 1999 2003 2007 2011 2015

Measured indomestic currency

Measured in acommon currency

1) Hourly labour costs in manufacturing.

2) Index 1995 = 100.

Sources: Statistics Norway, Norwegian Technical Calculation Committee for Wage Settlements (TBU) and Norges Bank 8

Investment in mainland Norway picking up

Constant 2014 prices.1) In billions of NOK

1) Projections for 2017-2020 from MPR 1/17.

Sources: Statistics Norway and Norges Bank

50

100

150

200

250

300

350

2000 2003 2006 2009 2012 2015 2018

Other businessinvestment

Petroleum investment

Housing investment

9

Moderate growth internationally

0

1

2

3

4

5

6

2010 2012 2014 2016 2018 2020

Global

Trading partners

Global GDP and GDP for Norway’s trading partners.1) Annual change. Percent.2)

1) Purchasing power parity weights are used for global GDP growth. Export weights are used for

trading partners.

2) Projections for 2016-2020 from PPR 1/17.

Sources: IMF, Thomson Reuters and Norges Bank

10

Have rates abroad reached bottom?

0

1

2

3

4

5

2008 2010 2012 2014 2016 2018

Money market rates and forward rates for trading partners.1) Percent

1) At 28 March 2017.

Sources: Thomson Reuters and Norges Bank

11

Norwegian exports on the rise…

Annual change. Percent.

-20

-15

-10

-5

0

5

10

15

2010 2012 2014 2016 2018 2020

Exports frommainland Norway

Imports to Norway'strading partners

Sources: Statistics Norway, Thomson Reuters and Norges Bank 12

… but remains weak for oil services

Annual change. Percent

-20

-15

-10

-5

0

5

10

15

2010 2012 2014 2016 2018 2020

Exports frommainland Norway

Imports to Norway'strading partners

Exports from oilservice industry etc.

Other exports frommainland Norway

Sources: Statistics Norway, Thomson Reuters and Norges Bank 13

Agenda

Oil prices putting a brake on growth

– The economy has turned the corner in Norway…

– … and in other countries?

How far have the structural adjustments

come?

14

Structural adjustments

Changes in employment between 2014 Q3 and 2016 Q4. In thousands of persons

Sources: Statistics Norway and Norges Bank

-40 -30 -20 -10 0 10 20 30

Other sectors

Public sector

Construction

Hotel and restaurant

Oil-related industries

15

Activity and employment in Norwegian

industries

-25 -20 -15 -10 -5 0 5 10 15

Industry in total

Other industries

Primary industry without refining

Food, beverages and tobacco industry

Shipbuilding and engineering industry

Gross product¹

Employment²

Percentage change between 2014 Q3 and 2016 Q4

1) Volume. 2) Number of persons.

Source: Statistics Norway 16

Investment in Norwegian industries

Percentage change between 2014 Q3 and 2016 Q4. Volume

Source: Statistics Norway

-50 -30 -10 10 30 50 70 90

Industry in total

Other industries

Primary industry without refining

Food, beverages and tobacco industry

Shipbuilding and engineering industry

17

Productivity growth

GDP per hour worked. Percent

0

1

2

3

4

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Advancedeconomies

Norway

Sources: Statistics Norway, The Conference Board Total Economy DatabaseTM and Norges Bank 18

Productivity growth in Norway

0

1

2

3

4

5

6

Capital

GDP per hour worked. Percent

Sources: Statistics Norway and Norges Bank 19

Productivity growth in Norway

0

1

2

3

4

5

6 Education

Capital

GDP per hour worked. Percent

Sources: Statistics Norway and Norges Bank

20

Productivity growth in Norway

0

1

2

3

4

5

6 TFP

Education

Capital

GDP per hour worked. Percent

Sources: Statistics Norway and Norges Bank

21

ECONOMIC OUTLOOK

FOR NORWEGIAN

INDUSTRY

GOVERNOR ØYSTEIN OLSEN

4 April 2017