charts monetary policy report 2/2007
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Charts Monetary Policy Report 2/2007. 1 Monetary policy assessments and strategy. Chart 1.1 Interval of uncertainty for underlying inflation. Highest and lowest indicator. 1) 12-month change. Per cent. Monthly figures. Jan 02 – May 07. Highest indicator. Lowest indicator. - PowerPoint PPT PresentationTRANSCRIPT
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ChartsMonetary Policy Report
2/2007
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1 Monetary policy assessments and strategy
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Highest indicator
Lowest indicator
Chart 1.1 Interval of uncertainty for underlying inflation. Highest and lowest indicator. 1) 12-month change. Per cent. Monthly figures. Jan 02 – May 07
1) Highest and lowest indicator of CPI-ATE, weighted median and trimmed mean. See box on recent price developments.
Sources: Statistics Norway and Norges Bank
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Chart 1.2 Consumer prices. 12-month change. Per cent. Monthly figures. Jan 02 – May 07
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2002 2003 2004 2005 2006 2007
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6Other domestically produced
goods and services1) 2), (right-hand scale)
Imported consumer goods1) (right-hand scale)
Energy products (left-hand scale)
1) Adjusted for tax changes and excluding energy products.2) Adjusted for the estimated effect of reduced maximum day-care rates in 2006Sources: Statistics Norway and Norges Bank
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Chart 1.3 CPI and CPI-ATE1). 12-month change. Per cent. Monthly figures. Jan 02 – May 07
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2002 2003 2004 2005 2006 2007
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CPI-ATE
1) CPI-ATE: CPI adjusted for tax changes and excluding energy products. A further adjustment is made for the estimated effect of reduced maximum day-care rates in 2006.
Sources: Statistics Norway and Norges Bank
CPI
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1996 1998 2000 2002 2004 2006
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Sources: Norwegian Association of Real Estate Agents, Association of Real Estate Agency Firms, Finn.no, ECON, Oslo Stock Exchange (Reuters (EcoWin)), Statistics Norway and Norges Bank
Chart 1.4 Terms of trade, house prices and equity prices. Indices, 1996 = 100. Annual figures. 1996 – 2006
Terms of trade
Equity prices (OSEBX)
House prices
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Chart 1.5 3-month real interest rate1), 10-year real interest rate2) and the normal real interest rate in Norway. Per cent. Quarterly figures. 96 Q1 – 07 Q1
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1996 1998 2000 2002 2004 20060
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Interval for normal real interest rate
3-month real interest rate
1) 3-month money market rate deflated by the 12-quarter moving average (centred) of inflation measured by the CPI. Projections for the CPI from this report form the basis for this estimate.2) 10-year swap rate deflated by the inflation target.
Source: Norges Bank
10-year real interest rate
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2006 2007 2008 2009 2010
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Chart 1.6 Policy rates and forward rates at 9 March 2007 and 21 June 2007.1) Per cent. Daily and quarterly figures. 1 Jan 06 – 31 Dec 10
Sweden
UK
Euro area
US
1) Broken lines show forward rates on 21 June 2007. Dotted lines show forward rates on 9 March 2007. Forward rates are based on interest rates in the money market and interest rate swaps.
Sources: Reuters (EcoWin) and Norges Bank
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Chart 1.7 Exchange rates.1) The import-weighted exchange rate index (I-44), NOK/EUR and NOK/USD. Weekly figures. Week 1 2002 – Week 25 2007
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2002 2003 2004 2005 2006 20075
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NOK/EUR (right-hand scale)
NOK/USD (right-hand scale)
I-44(left-hand scale)
1) A rising curve denotes a weaker krone exchange rate.
Source: Norges Bank
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Chart 1.8 CPI. 10-year moving average1) and variation2). Per cent. Annual figures. 1980 – 20063)
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1980 1985 1990 1995 2000 2005
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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) Projections for 2007 and 2008 from this report form the basis for this estimate.
Sources: Statistics Norway and Norges Bank
CPI
Inflation target
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1993 1996 1999 2002 20050
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1) Adjusted for tax changes and excluding energy products
Sources: Statistics Norway and Norges Bank
Chart 1.9 Rise in prices for domestically produced goods and services1) and output gap level (lagged by 4 quarters). Quarterly figures. 93 Q1 – 07 Q1
Output gap (left-hand scale)
Rise in prices for domestically
produced goods and services
(right-hand scale)
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Chart 1.10 Expected consumer price inflation 2 years ahead. Employer/employee organisations and experts1). Per cent. Quarterly figures. 02 Q2 – 07 Q2
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2002 2003 2004 2005 2006 20070
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1) Employees in financial industry, macroanalysts and academics.
Source: TNS Gallup
Experts (red line)
Employer organisations (blue line)
Employee organisations (yellow line)
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Chart 1.11a Projected key policy rate in the baseline scenario with fan chart. Per cent. Quarterly figures. 05 Q1 - 10 Q4
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2005 2006 2007 2008 2009 2010
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30% 50% 70% 90%
Source: Norges Bank
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Chart 1.11b Projected output gap in the baseline scenario with fan chart. Per cent. Quarterly figures. 05 Q1 - 10 Q4
Source: Norges Bank
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Chart 1.11c Projected CPI in the baseline scenario with fan chart. 4-quarter rise. Per cent. Quarterly figures. 05 Q1 - 10 Q4
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2005 2006 2007 2008 2009 2010
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530% 50% 70% 90%
Sources: Statistics Norway and Norges Bank
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Chart 1.11d Projected CPI-ATE in the baseline scenario with fan chart. 4-quarter rise. Per cent. Quarterly figures. 05 Q1 - 10 Q4
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2005 2006 2007 2008 2009 2010
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430% 50% 70% 90%
Sources: Statistics Norway and Norges Bank
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Chart 1.12 Key policy rate in the baseline scenario in MPR 1/07 and MPR 2/07. Per cent. Quarterly figures. 05 Q1 – 10 Q4
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Source: Norges Bank
MPR 1/07
MPR 2/07
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Chart 1.13 Forward interest rates for trading partners and projected interest rate differential in MPR 1/07 and MPR 2/07. Money market rates1). Quarterly figures. 05 Q1 – 10 Q4
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1) Money market rates are approximately 0.2 percentage point higher than the key policy rate.2) Weighted average of trading partners' forward rates.3) Interest rate differential in the baseline scenario.
Source: Norges Bank
Interest rate differential against trading partners3)
Forward interest rates trading partners2)
MPR 1/07
MPR 2/07
9 March
21 June
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Chart 1.14 Import-weighted exchange rate (I-44)1) in the baseline scenario in MPR 1/07 and MPR 2/072). Quarterly figures. 05 Q1 - 10 Q4
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2005 2006 2007 2008 2009 2010
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1) A rising curve denotes a weaker krone exchange rate. 2)The exchange rate path is based on uncovered interest rate parity.
Source: Norges Bank
MPR 1/07
MPR 2/07
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Chart 1.15 Projected inflation and output gap in the baseline scenario. Per cent. Quarterly figures. 05 Q1 - 10 Q4
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2005 2006 2007 2008 2009 2010
CPI-ATE (right-hand scale)
Output gap (left-hand scale)
CPI (right-hand scale)
Sources: Statistics Norway and Norges Bank
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Chart 1.16 Debt burden and debt burden adjusted for general living expenses. Households with debt1). Per cent. Annual figures. 1987 – 20062)
Debt burden (left-hand scale)
Adjusted debt burden3) (right-hand scale)
1) Excluding self-employed and students. 2) Estimates for 2005 and 2006. 3) Disposable income is adjusted for general living expenses as calculated by the National Institute for Consumer Research (SIFO).
Sources: Statistics Norway, SIFO and Norges Bank
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Chart 1.17 Projections of household interest burden1) and debt burden2). Per cent. Annual figures. 1987 – 2010
Debt burden (right-hand scale)
Interest burden (left-hand scale)
1) Interest expenses after tax as a percentage of disposable income adjusted for estimated reinvested dividends less return on insurance claims and plus interest expenses.2) Loan debt as a percentage of disposable income adjusted for estimated reinvested dividends less return on insurance claims.
Sources: Statistics Norway and Norges Bank
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1) Adjusted for tax changes and excluding energy products. A further adjustment is made for the estimated effect of reduced maximum day-care rates in 2006.
Sources: Statistics Norway and Norges Bank
Chart 1.18 Comparison of rise in prices for domestically produced goods and services in two periods1). 4-quarter rise. Per cent. Quarterly figures. 96 Q1 – 98 Q4 and 06 Q1 – 08 Q4
96 Q1 – 98 Q4
06 Q1 – 08 Q4
1996 / 2006 1997 / 2007 1998 / 2008
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Chart 1.19a Key policy rate in the baseline scenario and in the alternatives with higher and lower inflation. Per cent. Quarterly figures. 05 Q1 - 10 Q4
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2005 2006 2007 2008 2009 2010
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30% 50% 70% 90%
Source: Norges Bank
Lower inflation
Higher inflation
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Chart 1.19b CPI-ATE1) in the baseline scenario and in the alternatives with higher and lower inflation. 4-quarter rise. Per cent. Quarterly figures. 05 Q1 - 10 Q4
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2005 2006 2007 2008 2009 2010
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430% 50% 70% 90%
1) CPI-ATE: CPI adjusted for tax changes and excluding energy products. A further adjustment is made for the estimated effect of reduced maximum day-care rates in 2006.
Sources: Statistics Norway and Norges Bank
Lower inflation
Higher inflation
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Chart 1.19c Output gap in the baseline scenario and in the alternatives with higher and lower inflation. Per cent. Quarterly figures. 05 Q1 - 10 Q4
30% 50% 70% 90%
Source: Norges Bank
Lower inflationHigher inflation
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Chart 1.20 Key policy rate in the baseline scenario and estimated forward rates1). Per cent. Quarterly figures. 06 Q1 – 10 Q4
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Baseline scenario
1) A credit risk premium and a technical difference of 0.20 percentage point have been deducted to make the forward rates comparable with the key policy rate. The grey, shaded interval shows the highest and lowest interest rates in the period 8 – 21 June 2007.
Source: Norges Bank
Forward rates
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Chart 1.21 Key policy rate, Taylor rate, growth rule and rule with external interest rates.1) Per cent. Quarterly figures. 00 Q1 – 07 Q1
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2000 2002 2004 2006
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8Taylor rate (blue line)
Key policy rate (red line)
Growth rule
(yellow line)
Rule with external interest rates (green line)
1) The CPI-ATE adjusted for the estimated effect of reduced maximum day-care rates in 2006 has been used as a measure of inflation. Other measures of underlying inflation that have been higher than the CPI-ATE would have resulted in a higher interest rate path.
Source: Norges Bank
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Chart 1.22 Key policy rate and interest rate developments that follow from Norges Bank's average pattern for the setting of interest rates.1). Per cent. Quarterly figures. 00 Q1 – 07 Q4
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1) The interest rate movements are explained by developments in inflation, mainland GDP growth, wage growth and 3-month interest rates among trading partners. See Inflation Report 3/04 for further discussion.
Source: Norges Bank
Interest rate movements that follow from Norges Bank's average
pattern with a 90% confidence interval (grey area)
Key policy rate (red line)
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Chart 1 Interval for the key policy rate at the end of each strategy period and actual developments.1) Per cent. Daily figures. 2 Jan 04 – 21 Jun 07
Key policy rate
3/031/04
Strategy period
2/041/05
3/04
1) The executive board's decision on 27 June is not shown in the chart, see table p. 62
Source: Norges Bank
2/053/05
1/062/06
3/06
1/07
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2 Economic developments
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Chart 2.1 Inflation. 12-month change in the CPI. Per cent. Monthly figures. Jan 02 – May 07
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2002 2003 2004 2005 2006 2007
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US
Japan
Euro area
UK
Sources: Reuters (EcoWin) and Norges Bank
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Chart 2.2 Consumer prices1), credit and money supply2) in the US, the euro area and Japan.3) Quarterly figures. 90 Q4 – 07 Q1
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1990 1995 2000 2005
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Consumer prices (right-hand scale)
Credit (left-hand scale)
Money supply3)
(left-hand scale)
1) CPI: 12-month rise. Per cent.2) Credit and money supply as a share of nominal GDP. Indices, 1995 = 100. Credit to private sector. Money supply: M3 for euro area and Japan, M2 for the US.3) Weighted by GDP in 2000 and PPP exchange rates.
Source: Bank for International Settlements
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Chart 2.3 Nominal and real interest rates on 10-year government bonds in the US and the euro area. Per cent. Daily figures. 2 Jan 06 – 21 Jun 07
US – nominal interest rate
US – real interest rate
Euro area – nominal interest rate
Source: Reuters (EcoWin)
Euro area – real interest rate
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Chart 2.4 Developments in international stock indices. 2 Jan 05 = 100. Daily figures. 2 Jan 05 – 21 Jun 07
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2005 2006 2007
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Source: Reuters (EcoWin)
Europe, STOXX
US, S&P 500
Norway, OSEBX
Japan Nikkei 225
Emerging economies
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Chart 2.5 Implied volatility in the foreign exchange market1) and the US equity market. Daily figures. 2 Jan 01 – 21 Jun 07
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2001 2003 2005 2007
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1) Index that describes risk in the global foreign exchange market as reflected in option prices for EUR/USD, USD/JPY and EUR/JPY.
Sources: Reuters (EcoWin) and Norges Bank
Implied volatility in the foreign exchange market
Implied volatility of US equities
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Chart 2.6 GDP. 4-quarter change. Per cent. Quarterly figures. 01 Q1 – 07 Q1
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2001 2002 2003 2004 2005 2006 2007
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Japan
1) Measured by factor price.
Sources: Reuters (EcoWin) and Norges Bank
US
Euro area UK
ChinaIndia¹)
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Chart 2.7 US – homes for sale at month-end compared with the month's sales. 3-month moving average. Monthly figures. Jan 90 – Apr 07
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1990 1995 2000 2005
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Sources: Reuters (EcoWin) and Norges Bank
Existing homes
New homes
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Chart 2.8 Mainland GDP. Annual growth in volume. Per cent. Annual figures. 1971 – 20071)
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1971 1976 1981 1986 1991 1996 2001 20061) Projection for 2007.
Sources: Statistics Norway and Norges Bank
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170
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1995 1997 1999 2001 2003 200590
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170
190
Sources: Statistics Norway and Norges Bank
Chart 2.9 Terms of trade. Index, 1995 = 100. Annual figures. 1995 – 2006
Traditional goods and services
Total
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Chart 2.10 Equity and return on equity before tax for some companies listed on the Oslo Stock Exchange.1) Per cent. Quarterly figures. 00 Q1 – 07 Q1
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2000 2002 2004 2006-30
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Equity ratio
Return on equity
1) Excluding financial undertakings, Statoil and Hydro.
Sources: The undertakings' quarterly reports (group) andNorges Bank
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Source: Reuters (EcoWin)
Chart 2.11 Equity indices. 1 Jan 97 = 100. Daily figures. 1 Jan 97 – 21 Jun 07
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1997 1999 2001 2003 2005 20070
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Europe, Stoxx 600
Norway, OSEBX US, S&P 500
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Chart 2.12 Mainland GDP. Growth on previous quarter. Seasonally adjusted. Per cent.Quarterly figures. 06 Q1 - 07 Q31)
1) Projections for 07 Q2 and 07 Q3. See the box "Short-term projections for mainland GDP growth" in Inflation Report 2/06 for a description of the different models.
Sources: Statistics Norway and Norges Bank
Monthly indicatorBVARMPR 2/07
ARIMAActual
VARRegional network
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0
2
4
6
8
10
1983 1987 1991 1995 1999 2003 20070
2
4
6
8
10
Chart 2.13 Unemployed. LFS unemployment, registered unemployed and persons on ordinary labour market programmes. Percentage of labour force. Seasonally adjusted. Monthly figures. Feb 83 – May 07
Sources: Statistics Norway, Norwegian Labour and Welfare Organisation (NAV) and Norges Bank
Registered unemployed and on labour market programmes
LFS unemployment
Registered unemployed
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0,0
0,1
0,2
0,3
0,4
0,5
1980 1985 1990 1995 2000 20050,0
0,1
0,2
0,3
0,4
0,5
Chart 2.14 Number of vacancies per registered unemployed. 3-month centred moving average. Seasonally adjusted. Monthly figures. Feb 80 – Apr 07
Sources: Norwegian Labour and Welfare Organisation (NAV) and Norges Bank
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-5
-3
-1
1
3
5
1983 1987 1991 1995 1999 2003 2007-5
-3
-1
1
3
5
Chart 2.15 Estimates for the output gap. Per cent. Annual figures. 1983 – 20071)
1) Projection for 2007.
Source: Norges Bank
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Chart 2.16 Change in employment on previous year (per cent) and LFS unemployment as a percentage of the labour force. Annual figures. 1980 – 20101)
-4
-2
0
2
4
0
2
4
6
8
1980 1985 1990 1995 2000 2005 2010
1) Projections for 2007 - 2010.
Sources: Statistics Norway and Norges Bank
LFS unemployment rate (right-hand scale)
Employment(left-hand scale)
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68
69
70
71
72
73
74
1983 1987 1991 1995 1999 2003 200768
69
70
71
72
73
74
Chart 2.17 Labour force participation rate for persons aged 16 to 74. Annual figures. 1983 – 20071)
1) Projections for 2007.
Sources: Statistics Norway and Norges Bank
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Chart 2.18 Registered employees from new EU countries. 1000s of persons in the period Jan – May
0
5
10
15
20
25
0
5
10
15
20
25Poland Lithuania Estonia Latvia
2006 2007
Source: Central Office - Foreign Tax Affairs
20052004
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Chart 2.19 Reasons for use of foreign labour. Per cent
0
20
40
60
80
0
20
40
60
80
Source: Norges Bank
Shortage of Norwegian labour
Season Cut costsQualifica-
tions Other
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Chart 2.20 Average monthly earnings. Wage indices. 4-quarter change. 3-quarter centred moving average. Per cent. 99 Q2 – 06 Q4
0
2
4
6
8
1999 2001 2003 20050
2
4
6
8
Source: Statistics Norway
Manufacturing
Transport and communications
Wholesale and retail trade
Construction
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Chart 2.21 Annual wage growth1) and LFS unemploy-ment. Per cent. Annual figures. 1993 – 20102)
0
2
4
6
8
1993 1997 2001 2005 20090
2
4
6
8
Unemployment rate
Annual wage growth
1) Average for all groups. Including estimated costs of increase in number of vacation days and introduction of mandatory occupational pension.2) Projections for 2007 - 2010.
Sources: Technical Reporting Committee on IncomeSettlements, Statistics Norway and Norges Bank
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Chart 2.22 Annual wage growth1) deflated by the CPI2). Per cent. Annual figures. 1990 – 2009
0
1
2
3
4
5
1990 1994 1998 2002 20060
1
2
3
4
5
1) Average for all groups. Including estimated costs of increase in number of vacation days and introduction of compulsory occupational pension. Projections for 2007 - 2009.2) 3-year centred moving average. CPI projections for 2007 - 2010.
Sources: Technical Reporting Committee on IncomeSettlements, Statistics Norway and Norges Bank
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70
71
72
73
74
75
76
77
1985 1990 1995 2000 2005 20100
1
2
3
4
5
6
7
Chart 2.23 Labour costs as a share of factor income in mainland Norway and registered unemployment. Per cent. Annual figures. 1985 – 20101)
1) Projections for 2007 - 2010.
Sources: Statistics Norway, Norwegian Labour and Welfare Organisation (NAV) and Norges Bank
Labour cost share (left-hand scale)
Registered unemployment (right-hand scale)
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Chart 2.24 CPI and indicators of underlying inflation. 12-month change. Per cent. Monthly figures. Jan 02 – May 07
-2
0
2
4
6
2002 2003 2004 2005 2006 2007-2
0
2
4
6
Weighted median1)
CPI-ATE3)
Trimmed mean1), 2)
1) Estimated on the basis of 146 sub-groups of the CPI-AT.2) Price changes accounting for 20 per cent of the weighting base are eliminated.3) CPI-ATE: CPI adjusted for tax changes and excluding energy products. A further adjustment is made for the estimated effect of reduced maximum day-care rates in 2006.
Sources: Statistics Norway and Norges Bank
CPI
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-4
-2
0
2
4
1993 1996 1999 2002 2005 20080
1
2
3
4
5
1) CPI-ATE: CPI adjusted for tax changes and excluding energyproducts. A further adjustment is made for the estimated effect of reduced maximum day-care rates in 2006.2) Projections for period 07 Q2 – 10 Q4.
Sources: Statistics Norway and Norges Bank
Chart 2.25 Change in prices for domestically produced goods and services measured by the CPI-ATE1) (4-quarter change) and output gap level (lagged by 4 quarters). Quarterly figures. 93 Q1 – 10 Q42)
Output gap (left-hand scale)
Change in prices for domestically produced goods
and services (right-hand scale)
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Chart 2.26 CPI-ATE.1) Total and by supplier sector2). 12-month change. Per cent. Monthly figures. Jan 02 – Dec 103)
-6
-3
0
3
6
2002 2004 2006 2008 2010-6
-3
0
3
6
1) CPI-ATE: CPI adjusted for tax changes and excluding energy products. A further adjustment is made for the estimated effect of reduced maximum day-care rates in 2006.2) Norges Bank's estimates.3) Projections for June 2007 – December 2010.
Sources: Statistics Norway and Norges Bank
Domestically produced goods and services
CPI-ATE
Imported consumer goods
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Chart 2.27 Indicator of external price impulses to imported consumer goods measured in foreign currency. Per cent. Annual figures. 1995 – 20101)
1) Projections for 2007 – 2010.
Source: Norges Bank
-3
-2
-1
0
1
2
-3
-2
-1
0
1
2
1995 1998 2001 2004 2007 2010
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Chart 2.28 CPI and CPI-ATE1). 12-month change. Per cent. Monthly figures. Jan 02 – Dec 102)
-2
0
2
4
6
2002 2004 2006 2008 2010-2
0
2
4
6
1) CPI-ATE: CPI adjusted for tax changes and excluding energy products. A further adjustment is made for the estimated effect of reduced maximum day-care rates in 2006.2) Projections for June 2007 – December 2010.
Sources: Statistics Norway and Norges Bank
CPI-ATE
CPI
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Chart 2.29 Household real disposable income1) and consumption. Annual rise. Per cent. Annual figures. 1997 – 20102)
0
2
4
6
8
1997 2000 2003 2006 20090
2
4
6
8
1) Adjusted for estimated reinvested share dividends for 2000 - 2005.2) Projections for 2007 – 2010.
Sources: Statistics Norway and Norges Bank
Real income growthReal growth in consumption
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0
2
4
6
1992 1995 1998 2001 2004 2007-20
0
20
40Consumption (left-hand scale)
Trend indicator (right-hand scale)
Sources: Statistics Norway, TNS Gallup and Norges Bank
Chart 2.30 Household trend indicator (seasonally adjusted diffusion index) and trend in private consumption (4-quarter growth). Quarterly figures. 92 Q3 – 07 Q2
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-5
5
15
25
35
1993 1996 1999 2002 2005 20080
2
4
6
8
Saving ratio (right-hand scale)
Households' expectations regarding their own financial situation and the Norwegian economy next year (left-hand scale)
1) There is a break in the series between 1995 and 1996. 2) Adjusted for estimated reinvested share dividends for 2000 – 2005.3) Figures for household expectations for 07 H1.
Sources: Statistics Norway, TNS Gallup and Norges Bank
Chart 2.31 Household expectations and saving ratio1, 2). Annual figures. 1993 – 20073)
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-15
-10
-5
0
5
10
1980 1985 1990 1995 2000 2005 2010-15
-10
-5
0
5
10
Saving
Net lending
1) There is a break in the series between 1995 and 1996. 2) Adjusted for estimated reinvested share dividends for 2000 – 2005.3) Projections for 2007 - 2010.
Sources: Statistics Norway and Norges Bank
Chart 2.32 Household saving and net lending as a share of disposable income.1.2) Annual figures. 1980 – 20103)
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Sources: Norwegian Association of Real Estate Agents, Association of Real Estate Agency Firms, FINN.no, ECON and Statistics Norway
-5
0
5
10
15
20
25
2002 2003 2004 2005 2006 2007-5
0
5
10
15
20
25
Chart 2.33 House prices and credit to households (C2). 12-month change. Per cent. Monthly figures. Jan 02 – May 07
House prices
C2
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Chart 2.34 Expected real return on the Government Pension Fund - Global. In billions of 2007 NOK. Annual figures. 2002 – 2010
0
30
60
90
120
2002 2004 2006 2008 20100
30
60
90
120Expected real return (RNB 2007)
Structural, non-oil deficit
Source: Ministry of Finance (Revised National Budget 2007)
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Chart 2.35 Underlying spending growth in the government budget and nominal growth in mainland GDP. Per cent. Annual figures. 1985 – 20071)
0
5
10
15
1985 1990 1995 2000 20050
5
10
15
1) Projections for 2007 from the Ministry of Finance.
Sources: Ministry of Finance (RNB 2007) and Statistics Norway
Underlying spending growth
Growth in mainland GDP
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Chart 2.36 Investment in oil and gas production including pipeline transport. Investment level in billions of NOK (constant 2004-prices) and annual growth (per cent). Annual figures. 1995 – 20101)
-30
-15
0
15
30
50
60
70
80
90
100
110
1995 1998 2001 2004 2007 20101) Projection for 2007 – 2010.
Sources: Statistics Norway and Norges Bank
Investment level (right-hand scale)
Annual growth(left-hand scale)
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10
15
20
25
May Aug Nov Feb May Aug Nov Actual10
15
20
25
Source: Statistics Norway
Chart 2.37 Investment statistics for manufacturing. Estimated and actual investment (current prices). In billions of NOK
2007
2004
2005
2006
Estimated previous year
Estimate current year
2008
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-5
5
15
25
35
2003 2004 2005 2006 2007-5
5
15
25
35
Chart 2.38 Credit to enterprises1) and enterprises' liquid assets2). 12-month change. Per cent. Jan 03 – Apr 07
1)Total debt non-financial enterprises mainland Norway (C3).2) Non-financial enterprises' liquid assets (M2).
Source: Statistics Norway
C3
M2
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50
75
100
125
150
2002 2003 2004 2005 2006 200750
75
100
125
150
Sources: Statistics Norway and Norges Bank
Goods-producing industries
Service industries
Chart 2.39 Commercial building starts.In 1000 m². 12-month moving average. Jan 02 – Apr 07
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-20
-10
0
10
20
1980 1985 1990 1995 2000 2005 2010-4
-2
0
2
4Fixed investment (left-hand scale)
GDP (right-hand scale)
1) Trend calculated using Hodrick-Prescott filter. See Staff Memo 2005/2 (www.norges-bank.no) for further details.2) Based on annual projections for 2007 - 2010.
Sources: Statistics Norway and Norges Bank
Chart 2.40 GDP and fixed investment. Mainland Norway. Percentage deviation from trend.1) Quarterly figures. 80 Q1 – 10 Q22)
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50
100
150
200
250
2001 2002 2003 2004 2005 2006 200750
100
150
200
250
Metals
Pulp and paper products
1) Norges Bank's estimates based on world market prices.
Sources: Reuters (EcoWin), Statistics Norway and Norges Bank
Aggregated export price index
Farmed salmon and trout
Chart 2.41 Price indices1) for Norwegian exports in NOK. 2001 = 100. Quarterly figures. 01 Q1 – 07 Q1
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Boxes
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Developments in energy and commodity markets
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Chart 1 Oil inventories. In billions of barrels. Monthly figures. Jan 00 – May 07
0,8
0,9
1
1,1
1,2
2000 2002 2004 20062,3
2,5
2,7
2,9
OECD (right-hand scale)
US (left-hand scale)
Sources: International Energy Agency (IEA), Energy Information Agency (EIA) and Reuters (EcoWin)
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Chart 2 Price of crude oil (USD per barrel) and petrol (cents per gallon) in the US. Weekly figures. Week 1 2005 – Week 25 2007
150
200
250
300
350
jan 05 jul 05 jan 06 jul 06 jan 07 jul 0740
50
60
70
80Crude oil
(right-hand scale)
Petrol (left-hand scale)
Source: Reuters (EcoWin)
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Chart 3 Spare OPEC capacity. In million barrels per day. Monthly figures. Jan 00 – May 07
0
2
4
6
8
10
2000 2001 2002 2003 2004 2005 2006 20070
2
4
6
8
10
Source: International Energy Agency (IEA)
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Chart 4 Oil price (Brent Blend) in USD per barrel. Daily figures. 2 Jan 03 – 21 Jun 07. Futures prices from 9 Mar 07 and 21 Jun 07 (broken lines). Monthly figures. Apr 07 – Dec 09
20
40
60
80
2003 2004 2005 2006 2007 2008 200920
40
60
8021 Jun 07
Sources: Reuters (EcoWin) and Norges Bank
9 Mar 07 (MPR 1/07)
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Chart 5 Average prices for crude oil (USD per barrel) and natural gas (USD per 1000 Sm3). Quarterly figures. 97 Q1 – 07 Q2
0
100
200
300
400
500
1997 1999 2001 2003 2005 20070
20
40
60
80
100
Gas price UK (left-hand scale)1)
Norwegian gas (left-hand scale)
1) The figures for 07 Q2 are the average of the daily figures so far in the period
Sources: Statistics Norway, Reuters (EcoWin) and Norges Bank
Oil price Brent Blend (right-hand scale)1)
USD/1000 Sm3 USD per barrel
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Chart 6 International commodity prices in USD. Index, 2000 = 100. Weekly figures. Week 1 00 – Week 25 07
50
100
150
200
250
300
350
2000 2002 2004 200650
100
150
200
250
300
350
Sources: Reuters (EcoWin) and The Economist
Agricultural products excl. food
Food
Industrials
Total commodity index
Metals
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Chart 7 Stocks of metals on the London Metal Exchange at year-end. In 1000s of tons. Annual figures. 1990 – 2006
0
500
1000
1500
2000
2500
1990 1995 2000 20050
50
100
150
200
Source: Reuters (EcoWin)
Nickel (right- hand scale)
Aluminium (left- hand scale)
Zinc (l.h.scale)Copper (l.h. scale)
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Chart 8 Commodity prices. Index, 1 Jan 2000 = 100. Spot price: Daily figures. 4 Jan 00 – 21 Jun 07. Forward prices from 21 Jun 07 (broken line). Monthly figures. Jul 07 – Jul 09
0
100
200
300
400
500
2000 2002 2004 2006 20080
100
200
300
400
500
Sources: Reuters (EcoWin), Chicago Board of Trade, New York Board of Trade and Norges Bank
Coffee Aluminium
Wheat
Copper
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Recent price developments
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Chart 1 CPI and CPI-ATE1). 12-month rise. Projections from MPR 1/07 (broken line) and actual. Per cent. Monthly figures. Jan 05 – May 07
0
1
2
3
4
2005 2006 20070
1
2
3
4
1) CPI-ATE: CPI adjusted for tax changes and excluding energy products. A further adjustment is made for the estimated effect of reduced maximum day-care rates in 2006.
Sources: Statistics Norway and Norges Bank
CPI-ATE
CPI
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Chart 2 Electricity prices. Nord Pool. NOK/MWh. Monthly figures. Jan 02 – May 07. Forward prices (broken line) from 07 Q3
0
200
400
600
2002 2004 2006 20080
200
400
600
Sources: Nord Pool and Norges Bank
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Chart 3 Domestic supplier sectors in the CPI-ATE1). 12-month change. Per cent. Monthly figures. Jan 04 – May 07
-3
0
3
6
2004 2005 2006 2007-3
0
3
6
Domestically producedconsumer goods
House rents
Services with wages as a dominant cost factor
1) CPI-ATE: CPI adjusted for tax changes and excluding energy products.
Sources: Statistics Norway and Norges Bank
Other services
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Chart 4 Prices for product groups in the CPI that are largely imported. 12-month change. Per cent. Monthly figures. Jan 04 – May 07
-12
-8
-4
0
4
2004 2005 2006 2007-12
-8
-4
0
4
Source: Statistics Norway
Cars
Clothing and footwear
Audiovisual equipment
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Chart 5 Different price indices. 12-month change. Per cent. Monthly figures. Jan 03 – May 07
-5
0
5
10
15
2003 2004 2005 2006 2007-5
0
5
10
15
Source: Statistics Norway
Producer prices for the domestic market
Construction cost index for residential buildings
Price index for first hand sales
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Is global inflation on the rise?
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Chart 1 Consumer prices (year-on-year rise) and real interest rate in the US. Per cent. Monthly figures. Jan 60 – May 07
-5
0
5
10
15
1960 1970 1980 1990 2000-5
0
5
10
15Consumer price inflation
Real interest rate
Sources: Reuters (EcoWin) and Norges Bank
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Chart 2 Commodity prices1) (index, 1970 = 100) and consumer prices in the OECD (4-quarter rise) Per cent. Quarterly figures. 70 Q1 – 07 Q1
0
5
10
15
20
1970 1980 1990 2000100
200
300
400
500Consumer prices in the OECD (left-hand
scale)
Commodity prices (right-hand scale)
1) Goldman Sachs commodity index
Source: Reuters (EcoWin)
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Chart 3 Commodity prices1) (index, 1970 = 100) and output gap in the G7 countries (per cent). Annual figures. 1970 – 2006
-6
-3
0
3
6
1970 1980 1990 2000100
200
300
400
500
Output gap in G7 (left-hand scale)
Commodity prices (right-hand scale)
1) Goldman Sachs commodity index
Sources: OECD and Reuters (EcoWin)
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Chart 4 Wage growth in emerging economies.12-month growth. 3-month moving average. Per cent. Monthly figures1). Jan 04 – May 07
0
5
10
15
20
25
30
2004 2005 2006 20070
5
10
15
20
25
30
China
1) Annual figures for China
Sources: Reuters (EcoWin) and Norges Bank
Russia
South Korea
Mexico
Brazil
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Chart 5 Chinese export prices. Annual rise. Per cent. 2005 and 2006
-6
-3
0
3
6
9
12
2005 2006-6
-3
0
3
6
9
12IT equip. TelecomsEl. machinery FurnitureClothing Footwear
Sources: CEIC and Norges Bank
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Chart 6 Productivity. Growth on previous quarter. Annualised rate1). Per cent. Quarterly figures. 93 Q1 – 06 Q4
0
1
2
3
4
1993 1997 2001 20050
1
2
3
4
1) 8-quarter moving average
Sources: OECD and Norges Bank
Euro area
UK US
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Chart 7a Long-term inflation expectations. Based on inflation-indexed bonds. 30-day moving average. Daily figures. 10 Feb 05 – 21 Jun 07
0
1
2
3
4
2005 2006 20070
1
2
3
4
Sources: Reuters (EcoWin) and Norges Bank
US
UK
Euro area
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Chart 7b Forward rates among trading partners.1) Money market rates.2) Per cent. Quarterly figures. 07 Q3 – 10 Q4
0
1
2
3
4
5
6
2007 2008 2009 20100
1
2
3
4
5
6
1) Weighted average2)Money market rates are approximately 0.2 percentage point higher than the key policy rate.
Sources: Reuters (EcoWin) and Norges Bank
9 March 2007 (MPR 1/07)
21 June 2007
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Chart 8 China's share of total global exports within different product groups. Per cent. Annual figures. 1990 – 2005
0
5
10
15
20
25
1990 1995 2000 20050
5
10
15
20
25
Office and telecoms equipment
Sources: WTO International Trade Statistics 2006 and Norges Bank
Iron and steel
Total manufactured goods
Textiles
Machinery and means of transport
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Developments in productivity growth
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Chart 1 Mainland GDP per person hour. Actual and trend1). Annual growth. Per cent. Basis value. 1971 – 2006
-1
0
1
2
3
4
5
6
1970 1980 1990 2000-1
0
1
2
3
4
5
6
Trend1)
1) Trend calculated using Hodrick-Prescott filter.
Sources: Statistics Norway and Norges Bank
Actual
Average 1971-79
Average 1980-89
Average 1990-06
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Chart 2 Mainland GDP per person-hour. Trend1). Annual growth. Per cent. 1971 – 2005
0
1
2
3
4
5
6
1970 1975 1980 1985 1990 1995 2000 2005
0
1
2
3
4
5
6
Sweden
1) Trend calculated using Hodrick-Prescott filter.2) EU-15 excluding Greece, Luxembourg, Portugal and Austria.
Sources: Statistics Norway, OECD and Norges Bank
Norway
US
EU2)
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Chart 3 Average annual growth in Mainland GDP per person-hour. Per cent
-1
0
1
2
3
4
5
6
MainlandNorway
Manufac-turing
Retailtrade
Other priv.sector
services
Publicsector
-1
0
1
2
3
4
5
61980 – 19891990 – 19992000 – 2006
Sources: Statistics Norway and Norges Bank
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Chart 4 Output gap and growth in labour productivity1). Productivity growth in quarterly figures. 80 Q1 – 06 Q4. Output gap in annual figures. 1980 – 2006
-4
-2
0
2
4
6
1980 1985 1990 1995 2000 2005-4
-2
0
2
4
6
Output gap
Productivity growth
1) Moving 5-quarter average. Excluding the public sector, housing services and power production.
Sources: Statistics Norway and Norges Bank
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7
9
11
13
18
27
28
33
34
38
0 10 20 30 40
Labour utilisation
Organisation
Investment in technology/IT
InvestmentQualifications
Logistics
Incentive schemesInternet
Capital utilisation
Outsourcing
Chart 5 Factors behind high productivity growth. Per cent1)
1) Each enterprise can list several factors. The percentages therefore add up to more than 100.
Source: Norges Bank
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Chart 6 Factors behind productivity growth ahead. Per cent1)
8
8
9
9
20
24
24
27
31
31
0 10 20 30
Labour utilisation
Organisation
Investment in technology/IT
Investment
Qualifications
Logistics
Incentive schemes
Internet
Capital utilisation
Outsourcing
1) Each enterprise can list several factors. The percentages therefore add up to more than 100.
Source: Norges Bank
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Chart 7 Expected developments in productivity growth in the period ahead. Per cent
Source: Norges Bank
0
25
50
75
100
0
25
50
75
100More Much the same Less
Manufac-turing
Cons-truction
ServicesRetail trade
Public sector
Total
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How often do enterprises change their prices?
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Chart 1 How frequently are prices changed? Results of survey. Per cent
0
10
20
30
40
50
Severaltimes a
day
Daily Everyweek
Everymonth
Everyquarter
Everysix
months
Everyyear
Every2ndyear
Other0
10
20
30
40
50
Source: Norges Bank
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Chart 2 Price changes as an average share of the total number of price observations per month. Results from data underlying the CPI. Per cent. Jan 99 - Dec 04
0
5
10
15
20
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec0
5
10
15
20
Sources: Statistics Norway and Norges Bank
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Chart 3 Changes in prices for domestically produced goods and services in the CPI-ATE. Overall monthly rise per quarter. Per cent. Average 1993 -2006
0
0,3
0,6
0,9
1,2
Q1 Q2 Q3 Q40
0,3
0,6
0,9
1,2
Sources: Statistics Norway and Norges Bank
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Chart 4 Which factors are important in connection with price rises? Survey results. Per cent
0 25 50 75 100
Very important ImportantOf minor importance UnimportantNot relev./Don't know
Source: Norges Bank
Less competition
Increase in prices for other input factors
Future rise in costs
Quality improvement
Increased demand
Competitors increase their prices
Increased labour costs
Supplier has increased prices
Higher rise in the general level of prices.
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Chart 5 Which factors are important in connection with price reductions? Survey results. Per cent
0 25 50 75 100
Very important ImportantOf minor importance UnimportantNot relev./Don't know
Source: Norges Bank
Reduction in labour costs
Expectations of cost reductions
Lower rise in the general level of prices
Reduced demand for product
Weakened negotiating position
Customer wants to renegotiate contract
Supplier has reduced prices
Increased competition
Competitors reduce their prices
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The projections in Monetary Policy Report
1/07 and 2/07
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-3
-2
-1
0
1
2
3
2005 2006 2007-3
-2
-1
0
1
2
3
Chart 1 CPI-ATE.1) Total and by supplier sector2). Projections from MPR 1/07 (broken line) and actual developments. 12-month rise. Per cent. Monthly figures3). Jan 05 – May 07
1) CPI-ATE: CPI adjusted for tax changes and excluding energy products. A further adjustment is made for the estimated effect of reduced maximum day-care rates in 2006.2) Norges Bank's estimates.3) Quarterly figures for projections by supplier sector
Sources: Statistics Norway and Norges Bank
Domestically produced goods and services
CPI-ATE
Imported consumer goods
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-3
-2
-1
0
1
2
3
-3
-2
-1
0
1
2
3
2004 2005 2006 2007
Source: Norges Bank
MPR 2/07
MPR 1/07
Chart 2 Output gap estimates in the baseline scenario in MPR 1/07 and 2/07. Per cent. Quarterly figures. 04 Q1 – 07 Q4
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Chart 3 Key policy rate in the baseline scenario in MPR 1/07 with fan chart and key policy rate in the baseline scenario in MPR 2/07 (red line). Per cent. Quarterly figures. 05 Q1 – 10 Q4
0123456789
2005 2006 2007 2008 2009 2010
0123456789
30% 50% 70% 90%
Source: Norges Bank
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Chart 4 Key policy rate in the baseline scenario in MPR 1/07 with fan chart and the isolated effect of higher interest rates abroad (red line). Per cent. Quarterly figures. 05 Q1 – 10 Q4
0123456789
2005 2006 2007 2008 2009 2010
0123456789
30% 50% 70% 90%
Source: Norges Bank
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Chart 5 Key policy rate in the baseline scenario in MPR 1/07 with fan chart and the isolated effect of higher capacity utilisation (red line). Per cent. Quarterly figures. 05 Q1 – 10 Q4
0123456789
2005 2006 2007 2008 2009 2010
0123456789
30% 50% 70% 90%
Source: Norges Bank
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-2
-1
0
1
2
3
4
2005 2006 2007 2008 2009 2010
-2
-1
0
1
2
3
4
Chart 6 Estimated output gap in the baseline scenario in MPR 1/07 with fan chart and output gap in the baseline scenario in MPR 2/07 (red line). Per cent. Quarterly figures. 05 Q1 – 10 Q4
Source: Norges Bank
30% 50% 70% 90%
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Chart 7 Projected CPI-ATE in the baseline scenario in MPR 1/07 with fan chart and CPI-ATE in the baseline scenario in MPR 2/07 (red line). 4-quarter rise. Per cent. Quarterly figures. 05 Q1 – 10 Q4
0
1
2
3
4
2005 2006 2007 2008 2009 2010
0
1
2
3
430% 50% 70% 90%
Sources: Statistics Norway and Norges Bank
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0
1
2
3
4
5
0
1
2
3
4
5
Chart 8 Mainland GDP. Projections for 2007 published before MPR 1/07 and 2/07. Percentage growth
Oct Feb JunMarSNFIN NBCF
JunFeb
Sources: National Budget 2007, Revised National Budget 2007, Economic Survey 1/2007 and 2/2007, Consensus Forecasts February and June 2007, Monetary Policy Report 1/07 and 2/07
May May
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0,0
0,5
1,0
1,5
2,0
0,0
0,5
1,0
1,5
2,0
Chart 9 CPI. Projections for 2007 published before MPR 1/07 and 2/07. Percentage rise
Oct Feb May JunMarSNFIN NBCF
JunFeb
Sources: National Budget 2007, Revised National Budget 2007, Economic Survey 1/2007 and 2/2007, Consensus Forecasts February and June 2007, Monetary Policy Report 1/07 and 2/07
May
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Chart 10 CPI-ATE.1) Projections for 2007 published before MPR 1/07 and 2/07. Percentage rise
0,0
0,5
1,0
1,5
2,0
0,0
0,5
1,0
1,5
2,0
Feb May JunMarOctSNFIN NB
1) CPI-ATE: CPI adjusted for tax changes and excluding energy products.
Sources: National Budget 2007, Revised National Budget 2007, Economic Survey 1/2007 and 2/2007, Monetary Policy Report 1/07 and 2/07
May
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Annex I
Regional network
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Chart 1 Norges Bank’s regional network. Planned investment growth next 12 months. Index1). Oct 02 – May 07
-3
-2
-1
0
1
2
3
okt 02 okt 03 okt 04 okt 05 okt 06-3
-2
-1
0
1
2
3
Retail trade
Municipal and hospital sector
ServicesManufacturing
1)The scale runs from -5 to +5, where -5 indicates a sharp decline and +5 indicates strong growth. See article "Norges Bank's regional network" in Economic Bulletin 3/05 for further information
Source: Norges Bank
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Chart 2 Norges Bank’s regional network. Changes in selling prices over the past 12 months. Index1). Oct 02 – May 072)
-2
-1
0
1
2
3
4
5
okt 02 okt 03 okt 04 okt 05 okt 06-2
-1
0
1
2
3
4
5
Building and construction
Domestically oriented manufacturing
Corporate services
1) The scale runs from -5 to +5, where -5 indicates a sharp decline and +5 indicates strong growth. See article "Norges Bank's regional network" in Economic Bulletin 3/05 for further information2) Building and construction from January 2005
Source: Norges Bank
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Annex II
Charts
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0
2
4
6
8
10
1995 1997 1999 2001 2003 2005 20070
2
4
6
8
10
Source: Norges Bank
Key policy rate
3-month money market rate
Chart 1 Norwegian interest rates. 3-month money market rate, key policy rate and 10-year government bond yield. Per cent. Monthly figures. Jan 95 – May 07
10-year effective government bond yield
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0
2
4
6
8
1995 1997 1999 2001 2003 2005 20070
2
4
6
8
Euro area1)
US
Japan
Chart 2 3-month interest rates in the US, the euro area and Japan. Per cent. Monthly figures. Jan 95 – May 07
1) Theoretical ECU rate up to and including December 98
Source: Reuters (EcoWin)
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0
2
4
6
8
10
1995 1997 1999 2001 2003 2005 20070
2
4
6
8
10
Sources: Reuters (EcoWin) and Norges Bank
UK
Sweden
Chart 3 3-month interest rates in the UK, Sweden and among Norway’s trading partners. Per cent. Monthly figures. Jan 95 – May 07
Trading partners
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85
90
95
100
105
110
115
1995 1997 1999 2001 2003 2005 200785
90
95
100
105
110
115
Import-weighted exchange rate, I-44 (1995 = 100)
Trade-weighted exchange rate index, TWI (1990 = 100)
Chart 4 Trade-weighted exchange rate index (TWI) and import-weighted exchange rate.1) Monthly figures. Jan 95 – May 07
1) A rising curve denotes a weaker krone exchange rate.
Source: Norges Bank
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1) A rising curve denotes a weaker krone exchange rate.
Source: Norges Bank
NOK/EUR(left-hand scale)
NOK/SEK(right-hand scale)
Chart 5 Bilateral exchange rates1). Monthly figures. Jan 95 – May 07
NOK/USD(left-hand scale)
5
6
7
8
9
10
1995 1997 1999 2001 2003 2005 200760
70
80
90
100
110
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0
5
10
15
20
1997 1999 2001 2003 2005 20070
5
10
15
20
Source: Statistics Norway
Credit to households
C2
Chart 6 The credit indicator (C2), credit to households and total credit to the non-financial private sector and municipalities, mainland Norway (C3). 12-month change. Per cent. Monthly figures. Jan 97 – Apr 07
C3 Mainland Norway