OIL AND THE NORWEGIAN ECONOMY GOVERNOR ØYSTEIN OLSEN NTNU, 29 SEPTEMBER 2015

Transcription

1 OIL AND THE NORWEGIAN ECONOMY GOVERNOR ØYSTEIN OLSEN NTNU, 9 SEPTEMBER 15

2 GDP per capita relative to OECD Index. OECD = 1. Purchasing power adjusted 15 Norway Mainland Norway Sources: Statistics Norway, OECD and Norges Bank 5

3 Oil and the Norwegian economy Oil prices Importance of oil in the Norwegian economy Consequences of the fall in oil prices A simple two-sector model 3

4 Oil prices have fallen Spot price, Brent Blend. USD per barrel Source: TR Datastream 4

5 Global oil production has increased 14 Growth since January 5. Millions of barrels per day US shale OPEC Rest of the world Total Source: EIA 5

6 Oil and the Norwegian economy Oil prices Importance of oil for the Norwegian economy Consequences of the fall in oil prices A simple two-sector model 6

7 Oil sector is important for Norway 14 Share of GDP Share of government revenues % 7 % Share of total investment 3% Oil service industry exports Share of exports 14% 46% Sources: Statistics Norway, Ministry of Finance and Norges Bank Oil and gas 7

8 Demand from the oil sector As a percentage of GDP for mainland Norway Labour costs in oil sector Intermediate goods Investment Sources: Statistics Norway and Norges Bank 8

9 Large export industry International turnover for Norwegian oil service industry in billions of NOK 13 Turnover Source: Rystad Energy 9

10 Oil and the Norwegian economy Oil prices Importance of oil for the Norwegian economy Consequences of the fall in oil prices A simple two-sector model 1

11 Petroleum investment I In billions of NOK. Constant 15 prices. Projections from Shutdown and removal Pipelines and onshore activities Exploration Field development Fields in production Share of mainland GDP. Percent Sources: Statistics Norway and Norges Bank

12 Petroleum investment II Volume. Annual change. Percent 1 March 14 September Sources: Statistics Norway and Norges Bank 1

13 Which sectors service the oil industry? Sectors providing goods and services to the oil industry (Norwegian continental shelf) 7% % 5% 5% Manufacturing General government Other Mainland services Sources: Statistics Norway and Norges Bank 13

14 Spillover effects Expected growth next six months. Annualised. Percent January 15 May 15 August 15 35% of total business sector Domestically oriented manufacturing Export industry Domestically oriented oil service industry Export-oriented oil service industry Construction Retail trade Commercial services Household services -5 Source: Norges Bank s regional network 14

15 Government petroleum revenue spending As a percentage of mainland GDP percent of GPFG Structural non-oil deficit Source: Ministry of Finance 15

16 Consumption growth Growth in total consumption between and 14 in selected countries. Volume. Percent Public Private Germany Denmark France Sweden Finland UK US Norway Source: Eurostat 16

17 Oil and the Norwegian economy Oil prices Importance of oil for the Norwegian economy Consequences of the fall in oil prices A simple two-sector model 17

18 Fall in oil prices Non-tradable sector plus oil service industry P T E1 E 1 y 18

19 Fall in oil prices and krone depreciation Non-tradable sector plus oil service industry Traditional export industry P T P T E1 E E1 E 1 y 1 y 19

20 Policy rate cut and further krone depreciation Demand from oil sector and mainland economy P T P Traditional exports T E E1 E1 E 1 1 y y

21 The role of monetary policy in economic restructuring Flexible inflation targeting Low and stable inflation.5% Stable developments in output and employment Monetary policy seeks to be robust 1

22 Monetary policy December 14: Key policy rate lowered, path revised down March 15: Key policy rate path revised down Key policy rate in MPR 3/15 and MPR 1/14 3 MPR 1/14 3,5% MPR 3/15 June 15: Key policy rate lowered, path revised down September 15: Key policy rate lowered, path revised down

23 Krone weakens in pace with oil price I-44¹ (inverted, l.h.s.) Oil price (r.h.s.) Jan-14 Jul-14 Jan-15 Jul ) Import-weighted exchange rate. A negative slope denotes a depreciation of the krone. Source: Norges Bank 3

24 Labour costs have come down Hourly labour costs relative to trading partners. Index. 1995= Domestic currency Sources: The Norwegian Technical Calculation Committee for Wage Settlements (TBU), Statistics Norway and Norges Bank 4

25 Baseline projections in Monetary Policy Report 3/ Key policy rate Output gap CPI-ATE Exchange rate (I-44) MPR 3/15 MPR / Sources: Statistics Norway and Norges Bank 5

26 OIL AND THE NORWEGIAN ECONOMY GOVERNOR ØYSTEIN OLSEN NTNU, 9 SEPTEMBER 15