OIL AND THE NORWEGIAN ECONOMY GOVERNOR ØYSTEIN OLSEN NMBU, 14 OCTOBER 2015

Transcription

1 OIL AND THE NORWEGIAN ECONOMY GOVERNOR ØYSTEIN OLSEN NMBU, 14 OCTOBER 15

2 Oil and the Norwegian economy Effects of oil on Norwegian economy Resource movement effect Spending effect Fall in oil prices Role of monetary policy in restructuring process

3 GDP per capita relative to OECD Index. OECD = 1. Current prices. Purchasing power adjusted 15 Norway Mainland Norway Sources: Statistics Norway, OECD and Norges Bank 5 3

4 The petroleum 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 4

5 Demand from the petroleum sector Percentage of GDP for mainland Norway Labour costs in petroleum sector Intermediate goods Investment Sources: Statistics Norway and Norges Bank 5

6 Which sectors service the oil industry? Sectors providing goods and services to the oil industry (Norwegian continental shelf) % Manufacturing 7% 5% 5% Government administration Other Mainland services Sources: Statistics Norway and Norges Bank 6

7 Oil-related exports have increased Oil investment and oil-related exports from mainland Norway. Constant 14 prices 5 Oil investment Norwegian continental shelf Oil-related exports 5 The oil sector as share of mainland exports. Figures for 14 Oil-related exports Sources: Rystad Energy, IMF, Statistics Norway and Norges Bank 7

8 Large export industry International turnover of Norwegian oil service industry. In billions of NOK 13 Turnover Source: Rystad Energy 8

9 The fund mechanism Petroleum revenues and return on investments Statens pensjonsfond Pension utland Fund Global Government Pension Fund Global NOK bn Transfer to finance non-oil budget deficit Non-oil revenues Statsbudsjettet Fiscal budget NOK bn Fiscal policy guideline (real return of the fund spent over time, estimated at 4 %) Expenditures 9 As at Source: Norges Bank Investment Management and Ministry of Finance

10 Government petroleum revenue spending Percentage of mainland GDP percent of GPFG Structural non-oil deficit Source: Ministry of Finance 1

11 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 11

12 Oil and the Norwegian economy Effects of oil on Norwegian economy Resource movement effect Spending effect Fall in oil prices Role of monetary policy in restructuring process 1

13 Oil prices have fallen Spot price, Brent Blend. USD per barrel Source: TR Datastream 13

14 Global oil production has increased Growth since January 5. Millions of barrels per day Resten of av the verden world US Skifer shale USAoil OPEC Samlet Total Source: EIA - 14

15 Oil inventories in OECD countries Total oil inventories in number of days of consumption 1) Average January April July October 1) The number of days of consumption is calculated using average demand over next three months. The grey band shows the interval between the highest and lowest level in the period Source: IEA 15 56

16 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

17 Petroleum investment II Volume. Annual change. Percent 1 March 14 September Sources: Statistics Norway and Norges Bank 17

18 Spillover effects Expected change 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 18

19 Oil and the Norwegian economy Effects of oil on Norwegian economy Fall in oil prices Role of monetary policy in restructuring process A simple two-sector model The current monetary policy situation 19

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

21 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 1

22 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

23 Flexible inflation targeting Low and stable inflation.5% Stable developments in output and employment Monetary policy seeks to be robust 3

24 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

25 Krone weakens in pace with oil prices I-44¹ (l.h.s.) Oil prices (r.h.s.) Jan-14 Jul-14 Jan-15 Jul-15 1) Import-weighted exchange rate. A negative slope denotes a depreciation of the krone. Source: Norges Bank

26 Labour costs relative to trading partners Index = Domestic currency Common currency Sources: The Norwegian Technical Calculation Committee for Wage Settlements (TBU), Statistics Norway and Norges Bank 6

27 Exports Annual growth. Percent Export growth Export market growth¹ ) Export market growth is the estimated import growth of 5 trading partners. Sources: Thomson Reuters and Norges Bank -15 7

28 Inflation¹ ) and output gap Percentage 4 3 Output gap (l.h.s.) Inflation (r.h.s.) ) CPI adjusted for tax changes and excluding energy products. Projections for 15 Q3 18 Q4 (broken line) Sources: Statistics Norway and Norges Bank 8

29 OIL AND THE NORWEGIAN ECONOMY GOVERNOR ØYSTEIN OLSEN NMBU, 14 OCTOBER 15