Economic perspectivesChartsAddress by Governor Svein Gjedrem

at the meeting of the Supervisory Council of Norges Bank

on Thursday, 12 February 2009

Fall in all countries and marketsIndex. 1 January 2004 = 100. 1 January 2004 – 10 February 2009

Equity prices

2004 2006 20080

100

200

300

400

500

Oil price1)

Cargo rates2)

2004 2006 200885

90

95

100

105

110

115

Japan

Prices

2004 2006 20080

50

100

150

200

250

300

Emerging markets

OECD

Industrial production

US

Source: Thomson Reuters

1) Brent blend

2) Baltic Dry Index

Inflation and the Icelandic krona (ISK)1) 1 January 2003 – 4 February 2009

Inflation12-month change. Per cent

2003 2004 2006 200802468

101214161820

ISK to NOK2)

2003 2004 2006 20080

5

10

15

20

25

30

35

40

Sources: Thomson Reuters and Norges Bank

1) As from 9 December 2008 ,foreign exchange market listings are used for the ISK/NOK exchange rate

2) A rising curve denotes a weaker krone exchange rate.

NOK to EUR1 January 2008 – 10 February 2009

Rate1)

Jan-08 May-08 Sep-08 Jan-097.5

8.5

9.5

10.5

Daily fluctuation in NOK2)

Jan-08 May-08 Sep-08 Jan-090

0.1

0.2

0.3

1) A rising curve denotes a weaker krone exchange rate.

2) Difference between highest and lowest rate during the day. 10-day moving average

Source: Thomson Reuters

Key rates abroad Per cent. 1 January 2003 – 10 February 2009

2003 2004 2005 2006 2007 2008 20090

1

2

3

4

5

6

7

0

1

2

3

4

5

6

7

UK

US

Euro area

Source: Thomson Reuters

Government supply of capital1)

Per cent. 2008 and 2009

Share of equity capital2)

Citigroup Bank of America

0

20

40

60

80Share of core capital3)

Royal Bank of Scotland

Lloyds Commerz-bank

0

20

40

60

80

Source: Bloomberg

1) Planned and transferred capital.

2) Supply of equity capital as share of equity capital.

3) Supply of core capital as share of core capital.

Norges Bank’s key policy rate Per cent. 1 January 2003 – 10 February 2009

2003 2004 2005 2006 2007 2008 20090

1

2

3

4

5

6

7

0

1

2

3

4

5

6

7

Source: Norges Bank

Liquidity 12-month change. 3-month moving average. Per cent.January 2005 – December 2008

2005 2006 2007 2008 2009-40

-20

0

20

40

60

80

100

-40

-20

0

20

40

60

80

100

Enterprises2)

Banks1)

1) Banks’ liquidity expressed as the sum of banks’ and money holding sector’s stock of Norwegian banknotes and coins in circulation plus their deposits in Norges Bank (M0).

2) Enterprises’ liquidity expressed as non-financial enterprises’ stock of Norwegian banknotes and coins, unrestricted bank deposits, certificates of deposit (M2).

Sources: Statistics Norway and Norges Bank

Current accounts US and ChinaIn billions of USD. 1980 – 2007

1980 1983 1986 1989 1992 1995 1998 2001 2004 2007-800

-600

-400

-200

0

200

400

-800

-600

-400

-200

0

200

400

China

US

Source: Thomson Reuters

National income1) Total growth from 2002 to 2007. Per cent

Denmark

UK

Sweden

US

Norway

0 10 20 30 40 50 60Source: OECD1) Disposable national income, in nominal terms

Inflation12-month change. Per cent. January 2000 – January 2009

2000 2001 2002 2003 2004 2005 2006 2007 2008-2

-1

0

1

2

3

4

5

6

-2

-1

0

1

2

3

4

5

6

Inflation1)

Underlying infla-tion2)

Sources: Statistics Norway and Norges Bank

1) CPI

2) CPI adjusted for tax changes and excluding temporary changes in energy prices. See Norges Bank’s Staff Memo 2008/7 for a description of the CPIXE.

Consumer spending and house pricesIndex. 1 January 2004 = 100

2003 2004 2005 2006 2007 200880

90

100

110

120

130

140

150

160

80

90

100

110

120

130

140

150

160

House prices

Consumerspending

Sources: Norwegian Association of Real Estate Agents, Association of Real Estate

Agency Firms, FINN.no, ECON Pöyry, Statistics Norway and Norges Bank

Premiums in international money markets1) 5-day moving average. Percentage points. 1 June 2007 – 1 February 2009

Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-080

0.4

0.8

1.2

1.6

2

2.4

2.8

0

0.4

0.8

1.2

1.6

2

2.4

2.8

Source: Thomson Reuters1) Average of the spread between 3-month money market rates and expected key rates in

the US, UK and euro area.

Norway’s terms of tradeExport prices/import prices. 1978 – 20091)

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

0.5

0.6

0.7

0.8

0.9

1

1.1

1.2

1.3

0.5

0.6

0.7

0.8

0.9

1

1.1

1.2

1.3

Sources: Statistics Norway, Thomson Reuters and Norges Bank

1) Projections for 2008 and 2009.

Relative labour costs1)

Deviation from average. 1970 – January 2009. Per cent

1970 1975 1980 1985 1990 1995 2000 2005 2010-20

-10

0

10

20

-20

-10

0

10

20

Weaker competit-iveness

January2009

1) In relation to our trading partners. Measured in a common currency. Expresses the competitiveness of Norway. The average is calculated from1970 to 2008.

Sources: Statistics Norway, the Technical Reporting Committee on Income Settlements(TRC), Ministry of Finance and Norges Bank

Debt to income ratio1)

Quarterly figures. 1987 Q1 – 2008 Q4

1987 1991 1995 1999 2003 20071

1.2

1.4

1.6

1.8

2

2.2

1

1.2

1.4

1.6

1.8

2

2.2

1) Household debt as a share of liquid disposable income adjusted for projected reinvested share dividends. Sources: Statistics Norway and Norges Bank

Interest rate premiums on government debt1)

Compared with Germany. Percentage points. 1 January 2008 – 10 February 2009

Jan-08 Apr-08 Jul-08 Oct-08 Jan-090

1

2

3

4

0

1

2

3

4

Spain

Greece

Italy

Netherlands

Source: Thomson Reuters1) 5-year government bonds.

Size of the banking sector Total assets as share of GDP. 2001 - 2007

2001 2002 2003 2004 2005 2006 20070

2

4

6

8

10

0

2

4

6

8

10

Switzerland2)

UK2)

Iceland3)

Sweden4

)Norway5)

1) All banks, excluding foreign-owned branches

2) UK resident banks

3) Kaupthing, Landsbanki and Glitnir and their foreign subsidiaries

4) All banks

5) All banks, excluding foreign-owned branches and subsidiaries

Sources: Swiss National Bank, Bank of England, Riksbanken, IMF, Financial Supervisory Authorities

Iceland and Norges Bank

Petroleum revenue spending in the government budgetIn billions of NOK. 2001 - 2007

2001 2002 2003 2004 2005 2006 2007 2008 20090

20

40

60

80

100

0

20

40

60

80

100

Source: Ministry of Finance

InflationMoving 10-year average1) and variation2) in CPI3). Per cent. 1980 - 2008

1980 1984 1988 1992 1996 2000 2004 20080

2

4

6

8

10

12

14

0

2

4

6

8

10

12

14

CPI

Variation

Inflation target

1) The moving average is calculated 7 years back and 2 years ahead.

2) The band around the CPI is the variation adjusted for tax changes and excluding energy products in the average period, measured by +/- one standard deviation.

3) Projections for 2008 – 2010 from PPR 3/08 form the basis for this estimate. Sources: Statistics Norway and Norges Bank

Banks’ equity capital1)

Per cent of total assets. 1875 - 2008

1875 1887 1899 1911 1923 1935 1947 1959 1971 1983 1995 20070

5

10

15

20

0

5

10

15

20

Sources: Klovland (2007), Statistics Norway and Norges Bank1) Includes savings and commercial banks

Banks’ sources of funding in Norway1)

Per cent of total assets. 1875 - 2008

1875188718991911192319351947195919711983199520070

20

40

60

80

100

0

20

40

60

80

100Equity capital

Deposits

Market funding and other debt

Sources: Klovland (2007), Matre (1992), Statistics Norway and Norges Bank1) Includes savings and commercial banks

Purchase of equitiesIndex.1997 Q4 = 0. Billions of NOK.1998 Q1 – 2008 Q4

1998 2000 2002 2004 2006 2008-50

0

50

100

150

200

-50

0

50

100

150

200

Return on equities, index

Purchase of equities, NOK bn

Source: Norges Bank

Ownership interests in stock marketsPer cent. 1998 – 20081)

1998 2000 2002 2004 2006 20080

0.2

0.4

0.6

0.8

1

1.2

1.4

0

0.2

0.4

0.6

0.8

1

1.2

1.4

Americas

Europe

Asia and Oceania

Sources: FTSE and Norges Bank1) Figures for 2008 up to 2008 Q3.