economic outlook - norges bank€¦ · the outlook suggests that the key policy rate will most...
TRANSCRIPT
ECONOMIC
OUTLOOK
DEPUTY GOVERNOR
JON NICOLAISEN
Jæren, 10 May 2017
1. Background: structural adjustments
and oil sector downturn
2. The current situation abroad
3. The economy in Norway has turned
the corner
2
1. Background: structural adjustments
and oil sector downturn
2. The current situation abroad
3. The economy in Norway has turned
the corner
3
Oil prices putting a brake on growth
4
GDP mainland Norway. Volume. Annual growth. Percent
0
1
2
3
4
2011 2012 2013 2014 2015 2016
Sources: Statistics Norway and Norges Bank
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
5
The key policy rate has been lowered
Percent
Source: Norges Bank
0
1
2
3
4
5
6
7
2008 2010 2012 2014 2016 2018 2020
Forecast, March 2017
Forecast, March 2014
Key policy rate
6
Oil price and krone exchange rate
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-hand scale)
7
Improved competitiveness
8
Labour costs in Norway, relative to trading partners’ labour costs1). Index2)
80
90
100
110
120
130
140
1995 1999 2003 2007 2011 2015
Measured in domesticcurrency
Measured in a commoncurrency
1) Hourly labour costs in manufacturing.
2) Index 1995 = 100.
Sources: Statistics Norway, Norwegian Technical Calculation Committee for Wage Settlements (TBU)
and Norges Bank
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
9
1. Background: structural adjustments
and oil sector downturn
2. The current situation abroad
3. The economy in Norway has turned
the corner
10
US: The dollar has risen in tandem with
long yields
US 10-year government bond yield and effective US dollar exchange rate
96
98
100
102
104
106
108
110
1
1.2
1.4
1.6
1.8
2
2.2
2.4
2.6
2.8
Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17
US 10-yeargovernment bondyield (l.h.s.)
Effective USDexchange rate(r.h.s.)
Source: Bloomberg 11
Europe: Somewhat wider sovereign yield spreads
-0.5
0
0.5
1
1.5
2
2.5
3
Apr-16 Jul-16 Oct-16 Jan-17 Apr-17
Italy
France
Germany
10-year government bond yields. Percent
Source: Bloomberg 12
Have rates abroad reached bottom?
0
1
2
3
4
5
2008 2010 2012 2014 2016 2018
September 2016
April 2017
Money market rates and forward rates for trading partners. Percent.
Sources Thomson Reuters and Norges Bank
13
Oil price
USD per barrel. January 2014 – December 20201)
1) Futures prices for May 2017 (broken lines) are the average of futures prices for the period 25 April – 1 May 2017.
Sources: Thomson Reuters and Norges Bank
0
20
40
60
80
100
120
140
2014 2015 2016 2017 2018 2019 2020
Futures prices, May 2017
Futures prices, March 2017
14
Active rigs and production in the US
Production in millions of barrels per day. Week 1 2013 – week 17 2017
Source: Thomson Reuters
6.5
7
7.5
8
8.5
9
9.5
10
2013 2014 2015 2016 2017
200
400
600
800
1 000
1 200
1 400
1 600
1 800
Active rigs (l.h.s.)
Production (r.h.s.)
15
1. Background: structural adjustments
and oil sector downturn
2. The current situation abroad
3. The economy in Norway has turned
the corner
16
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
17
Regional network reports broad upturn
18
Reported and expected output growth. Annualised. Percent
Source: Norges Bank
-5
-4
-3
-2
-1
0
1
2
3
4
Domest.oriented mfg.
Export industry Oil serv.domest.oriented
Oil serv. exportoriented
Construction Retail trade Commerc.services
Househ.Services
November 2016 – Past 3 months February 2017 – Past 3 months
February 2017 – Next 6 months
Unemployment
As a percentage of the labour force. Seasonally adjusted
1) Hordaland, Møre og Romsdal, Rogaland and Vest-Agder.
Sources: Norwegian Labour and Welfare Administration (NAV), Statistics Norway and Norges Bank
0
1
2
3
4
5
6
2010 2012 2014 2016 2018 2020
Registeredunemployment
Labour force survey(LFS) unemployment
Registeredunemployment, oil-dependent regions
19
House price inflation has risen
NOK per square metre
Sources: Finn.no, Eiendomsverdi and Real Estate Norway
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
2003 2005 2007 2009 2011 2013 2015 2017
Norway
Bergen
Oslo
Stavanger
20
Oil investment close to bottoming out
Constant 2015 prices1). 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
Oil investment
Housing investment
21
Is oil revenue spending levelling off?
Constant 2017 prices. In billions of NOK. 2000–20201)
0
50
100
150
200
250
300
350
2002 2005 2008 2011 2014 2017 2020
Structural non-oil deficit
4% of the GPFG
3% of the GPFG
1) Projections for 2017−2020 (broken line and shaded).
Sources: Ministry of Finance and Norges Bank 22
Historically low wage growth
-2
-1
0
1
2
3
4
5
6
7
1995 2000 2005 2010 2015 2020
Nominal wages
Real wages
Annual growth. Percent. 1995–2020
Sources: Statistics Norway, Norwegian Technical Calculation
Committee for Wage Settlements (TBU) and Norges Bank
23
Inflation is falling
Twelve-month change. Percent
0
1
2
3
4
5
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
CPI
CPI-ATE
Sources: Statistics Norway and Norges Bank
24
Forecast for the key policy rate
Norges Bank’s Executive Board, March
2017:
The Executive Board’s current assessment of
the outlook suggests that the key policy rate will
most likely remain at today's level in the period
ahead.
Norges Bank’s Executive Board, May 2017:
The outlook and the balance of risks for the
Norwegian economy do not appear to have
changed substantially since the March Report. The
key policy rate has therefore been kept unchanged
at this meeting.
Percent
Source: Norges Bank
-1
0
1
2
3
2010 2012 2014 2016 2018 2020
March 17
25
Increase in the number of monetary policy meetings and
publication of the minutes of monetary policy meetings
Norges Bank's Executive Board has decided to
publish the minutes of monetary policy meetings.
The content of the minutes will be included in the
Executive Board's assessment, which will be
published at the same time as the interest rate
decision is announced.
The Executive Board has also decided to increase
the number of monetary policy meetings from six
to eight per year, beginning in 2018.
26
ECONOMIC
OUTLOOK
DEPUTY GOVERNOR
JON NICOLAISEN
Jæren, 10 May 2017