OUTLOOK FOR THE

NORWEGIAN

ECONOMY

GOVERNOR ØYSTEIN OLSEN

Regional Network, 19 December 2017

Topics

Monetary policy

Global economy

Norwegian economy

2

Topics

Monetary policy

Global economy

Norwegian economy

3

Monetary policy in Norway

Low and stable inflation

Stable developments in output and

employment

Monetary policy must be robust

4 Source: Statistics Norway

-2

0

2

4

6

8

10

12

1985 1991 1997 2003 2009 2015

CPI

Five-year moving average

Inflation target

Topics

Monetary policy

Global economy

Norwegian economy

5

Better prospects internationally

Quarterly GDP growth1)

6 1) Three-quarter moving average.

Source: Thomson Reuters

-3

-2

-1

0

1

2

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

US

Euro area

UK

Upturn in a number of countries

Quarterly GDP growth in selected euro area countries1)

7

-3

-2

-1

0

1

2

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Germany

France

Italy

Spain

1) Three-quarter moving average.

Source: Thomson Reuters

Policy rates abroad have bottomed out

Policy rates and forward rates at 14 December

8 1) ECB’s deposit rate. Eonia from 2018 Q1.

Sources: Bloomberg, Thomson Reuters and Norges Bank

-1

0

1

2

3

4

5

6

2008 2010 2012 2014 2016 2018 2020

US

Euro area¹⁾

Sweden

UK

New “path” for oil prices?

USD per barrel Brent Blend

9 Sources: Thomson Reuters and Norges Bank

0

20

40

60

80

100

120

140

2010 2012 2014 2016 2018 2020

Spotpris

FuturesDecember 2017

FuturesSeptember 2017

Topics

Monetary policy

Global economy

Norwegian economy

10

I-44 and oil prices

USD per barrel Brent Blend and import-weighted exchange rate index1)

11

80

85

90

95

100

105

110

11520

40

60

80

100

120

140

2010 2011 2012 2013 2014 2015 2016 2017

Oil price (l.h.s.)

I-44 (r.h.s.)

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

Sources: Thomson Reuters and Norges Bank

Growth has picked up

Four-quarter change.1) Percent

12 1) GDP projection for 2017 Q4 and 2018 Q1 from MPR 4/17

Sources: Statistics Norway and Norges Bank

-4

-2

0

2

4

6

8

2005 2007 2009 2011 2013 2015 2017

Mainland GDP

Regional Network indicator

Regional Network confirms upturn

Reported and expected growth. Annualised. Percent

13

-5

-4

-3

-2

-1

0

1

2

3

4

5

Domesticallyoriented mfg.

Export industry Oil services Construction Retail trade Commercialservices

Hpuseholdservices

August 2017 -Past 3 months

November 2017 -Past 3 months

November 2017 -Next 6 months

Source: Norges Bank

Has petroleum investment bottomed out?

Annual change. Percent

14

-20

-15

-10

-5

0

5

10

15

20

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

MPR 4/17

Sources: Statistics Norway and Norges Bank

Unemployment has passed the peak

Unemployed as a percentage of the labour force. Seasonally adjusted

15

0

1

2

3

4

5

6

2010 2011 2012 2013 2014 2015 2016 2017

Registratedunemployment

Registratedunemployment oil-dependent regions

Labour forcesurvey (LFS) forunemployment

Sources: Norwegian Labour and Welfare Administration (NAV), Statistics Norway and Norges Bank

Historically low wage growth

Annual change. Percent

16

-2

-1

0

1

2

3

4

5

6

7

1995 2000 2005 2010 2015 2020

Nominal wages

Real wages

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

Inflation outlook

0

0.5

1

1.5

2

2.5

3

3.5

2010 2012 2014 2016 2018 2020

CPI-ATE

Inflation target

Percent

17 Sources: Statistics Norway and Norges Bank

Uncertainty - including the housing market

-15

-10

-5

0

5

10

15

20

2010 2012 2014 2016 2018 2020

Housing investment

Projections forhousing investment

House prices

Projections for houseprices

Annual change. Percent

18 Sources: Eiendomsverdi, Finn.no, Statistics Norway, Real Estate Norway and Norges Bank

Uncertainty - including the housing market

-15

-10

-5

0

5

10

15

20

2010 2012 2014 2016 2018 2020

Housing investment

Projections forhousing investment

Alternative scenario,housing investment

House prices

Projections for houseprices

Alternative scenario,house prices

Annual change. Percent

19 Sources: Eiendomsverdi, Finn.no, Statistics Norway, Real Estate Norway and Norges Bank

The Executive Board's assessment and

interest rate forecast

The Executive Board decided to keep

the key policy rate unchanged at 0.5%.

The changes in the outlook and risk

scenario generally indicate a somewhat

earlier rate increase than in the

previous report

20

0

1

2

3

4

5

6

7

2007 2009 2011 2013 2015 2017 2019

Key policy rate

MPR 4/17

MPR 3/17

Source: Norges Bank

OUTLOOK FOR THE

NORWEGIAN

ECONOMY

GOVERNOR ØYSTEIN OLSEN

Regional Network, 19 December, 2017