Chapter International economy. Main points from the OECD's Economic Outlook A broad-based recovery has taken hold Asia, the US and the UK have taken the lead. Continental Europe will follow Investment starting to take over as the driving force in the US Recovery in Japan is also driven by investment as well as exports (especially) to neighbouring Asian economies. Future expectations: - Sustained growth in the US and progressive recovery in Japan and Europe - Gradual reduction in unemployment - Low inflationary pressures and low interest rates for a considerable period
. GDP forecasts Percentage change on previous year 5 OECD EO 7 NB IR/ OECD EO 7 NB IR/ OECD EO 7 NB IR/ US.9 ¾. ½.8 ¼ Japan.7 ½.8 ¼.8 ¼ Germany.. ¼. ¼ France. ¼.7 ½. ½ UK.9.7 ½.9 ½ Sweden.5 ½. ½.7 ½ ).5 ½.8 ½.5 ½ ) Eurostat weights. CPI forecasts Percentage change on previous year 5 OECD EO 7 NB IR/ OECD EO 7 NB IR/ OECD EO 7 NB IR/ US. ¼.7.8 ½ Japan -. -¼ -. -½ -. -¼ Germany.9.8 ¾.7 ½ France.. ½.9 ¾ UK.8.6 ½.7 ½ Sweden.. ¼. )..5 ½. ¾ ) Eurostat weights (country's share of euro area consumption)
. Risk elements in Economic Outlook Weak balance sheets still prevalent in the business sector in Europe Households are highly indebted and house prices are high, (UK, USA, Australia etc.) making households vulnerable. Increase in interest rates as a result of wide public deficits Imbalances and risk of a sudden weakening of the US dollar Greatest concern in the longer term: - Public deficits and the lack of long-term fiscal frameworks Another major challenge: - Continued structural improvements.5 Structural surplus or deficit ) in government budgets As a percentage of nominal GDP. Annual figures. 5 5 US -5 Japan -5 - ) Dotted lines represent OECD's figures for and 5 95 96 97 98 99 5 - Source: OECD
.6 GDP growth in the US, Japan, the euro area and among Norway's trading partners combined. Seasonally adjusted annual rate and projected annual growth. Per cent 9 7 US Japan Trading partners 9 7 5 5 - - -5 5 6 Projected annual growth IR / - - -5-7 -7 Sources: EcoWin/ US Department of Commerce, ESRI (JP) EURO-OP Eurostat and Norges Bank.7 Quarterly change in GDP in Japan Contribution to growth in volume. Per cent Stocks Public consumption and investment Net export Private investment Private consumption GDP - - - Q Q Q Q - Sources: EcoWin/Cabinet Office
5.8 Japan. Developments around the last three upturns Indexed. Time of the trough (t) =. Green, blue and red curves have a trough in 99 Q, 999 Q and Q. Private consumption 5 Exports 5 5 5 5 95 95 99 99 9 9 98 t- t- t t+ t+ t+6 t+8 t+ t+ t+ t+6 t+8 t+ 98 85 t- t- t t+ t+ t+6 t+8 t+ t+ t+ t+6 t+8 t+ 85 Real gross investment GDP 5 5 5 5 95 t- t- t- t- t t+ t+ t+ t+ t+5 t+6 95 95 t- t- t- t t+ t+ t+ t+ t+5 t+6 95 Source: EcoWin.9 Deflators, Japan Indexed. 995 Q = 5 5 Private consumption 95 GDP ) 95 9 85 Gross domestic fixed investment 9 85 ) -month moving average 8 995 996 997 998 999 8 Sources: EcoWin/National statistics
. Japan's exports -month moving average. Indexed. January 99 = 5 To Asia To US To EU Total 5 5 5 5 9 9 9 9 9 95 96 97 98 99 5 Sources: EcoWin/National statistics. Japan's exports -month moving average. Indexed. January 99 = 75 75 To Asia To US To EU To China Total 5 5 5 5 9 9 9 9 9 95 96 97 98 99 Sources: EcoWin/National statistics
. Industrial output in the US, Japan and the euro area Percentage change on months earlier. -month moving average. Seasonally adjusted. Volume 5 5 US Japan - - - - - - - -5 997 998 999 - -5 Sources: EcoWin/Federal Reserve Board, Ministry of Economy,Trade and Industry and EUR-OP/EUROSTAT. PMI ) manufacturing for the US ), the euro area, Germany, Sweden and the UK Seasonally adjusted. Monthly figures 65 65 6 Sweden 6 55 55 5 5 5 UK Germany 5 ) Activity indicator USA 5 ) ISM, Manufacturing 998 999 5 Sources: EcoWin/Institute for Supply Management, NTC Research Ltd. and Swedbank/I&L
7 65. PMI ) services for the US ), the euro area, Germany and the UK Seasonally adjusted. Monthly figures US 7 65 6 UK 6 55 55 5 5 5 ) Activity indicator ) ISM, Non-manufacturing 999 Germany 5 Sources: EcoWin/ISM - Institute for Supply Management and NTC Research Ltd..5 Unemployment and employment Seasonally adjusted a. Unemployment as a share of the labour force 9 Germany 8 7 b. Employment in millions 8 US (left-hand scale) 9 6 5 UK US Germany (righthand scale) 8 Japan 97 98 99 97 98 99 7 Sources: EcoWin/National statistics
5.6 Consumer confidence indicators in the US, Germany, France, the euro area and the UK Seasonally adjusted diffusion index. Monthly figures US (left-hand scale) 5 Germany (righthand scale) UK (right-hand scale) 75-5 (right-hand scale) - 5 France (righthand scale) 998 999 - - Sources: EcoWin/EU Commission and the Conference Board.7a Retail trade in the US ), the euro area and the UK Percentage change on same month previous year. -month moving average. Seasonally adjusted. Volume 8 US 8 UK ) Retail trade in the US is a deflated value index - 998 999 - Sources: EcoWin/US Dept. of Commerce, Deutsche Bundesbank, Office for National Statistics and the ECB
.7b Retail trade in Germany, France and Sweden Percentage change on same month previous year. -month moving average. Seasonally adjusted. Volume 8 8 Sweden France Germany - 998 999 - Sources: EcoWin/US Dept. of Commerce, Deutsche Bundesbank, Office for National Statistics and the ECB.8 International commodity prices Trading partner currencies 9 9 8 USD 8 7 7 6 6 997 998 999 Sources: EcoWin, Norges Bank and The Economist
.9 Consumer and producer prices Trading partners. Percentage change on same month previous year.8. Monthly rise 6 5 6 5 -. -.8 Jan Mar May Jul Sep - - - 998 999 CPI PPI - - - Sources: EcoWin and Norges Bank. Consumer prices in the US and the euro area Percentage change on same month previous year US, Fed target variable, PCE deflator excl. food and energy 997 998 999 Sources: Bureau of Labor Statistics, Eurostat and Office for National Statistics
. Consumer prices in the UK and Sweden Percentage change on same month previous year UK (RPIX) Sweden (UNDX) 997 998 999 Sources: Bureau of Labor Statistics, Eurostat and Office for National Statistics. Interest rate expectations in the US Actual developments and expected key rate 6 6 July Key rate Oct Oct 5 Dec 9 June 999 5 Source: Norges Bank
. Interest rate expectations in the euro area Actual developments and expected key rate 6 6 Key rate July Oct Oct 5 Dec 9 June 999 5 Source: Norges Bank. Key rates and expected change in selected countries Key rate Change since.. Change since Executive Board meeting.8. Expected level in mo mo ) (March ) (Dec. ) US. -.5 None ¼ Japan Approaching None. -.75 None ¾ UK.75 -.5 +.5 ¼ ¾ Sweden.75 -. None ¾ ½ Denmark. -.75 None ¾ Switzerland.-.75 -.5 None n.a. n.a. Iceland 5. -.5 None n.a. n.a. Canada.75 None ½ Australia 5.5 +.5 +.5 5 ½ 5 ¾ New Zealand 5. -.75 None 5 ½ 6 ) Not adjusted for any maturity premium Sources: Reuters, Bloomberg and Norges Bank
Oil.5 OPEC's reference price with price band USD per barrel. Daily figures 5 5 5 5 5 5 Jan Apr Jul Oct Jan Apr Jul Oct Source: EcoWin
.6 Non-commercial operators' net positions in the WTI futures market since November Number of contracts 6 Oil price (WTI, right-hand scale) Net long positions USD per barrel 5 - - Net short positions 5-6 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 5 Sources: Energy Information Administration, NYMEX.7 Oil price in USD and euros per barrel -day moving average 5 5 USD per barrel 5 5 Euro per barrel 5 Jan Apr Jul Oct Jan Apr Jul Oct 5 Source: EcoWin
.8 Oil price Brent Blend USD per barrel. Daily figures 5 Futures prices December 5 5 IR / 5 5 5 Jan Jul Jan Jul Jan Jul Sources: Norges Bank, Telerate and IPE.9 Stocks of crude oil in the US In million barrels. Weekly figures 6 6 Highest and lowest values in the last five years 8 8 6 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 6 Source: US Department of Energy
. Stocks of heating oil in the US In million barrels. Weekly figures 9 9 8 7 Highest and lowest values in the last five years 8 7 Average 6 6 5 5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: EIA. Projected growth in demand at various times. OECD and non- OECD countries. Percentage growth on previous year January April July November Growth forecast for Growth forecast for OECD Non-OECD OECD Non-OECD Source: Energy Information Agency
In million barrels per day. OPEC - output and quotas 8 8 6 OPEC output 6 OPEC's quota Call on OPEC 998 999 Sources: International Energy Agency and Norges Bank. Oil production in Iraq, with forecast In million barrels per day. Monthly figures Forecast Jan May Sep Jan May Sep Jan May Sep Jan Source: Energy Information Agency and International Energy Agency
. Futures prices from 5 August and December USD per barrel Same spot price both days: USD 9.7 per barrel 9 8 7 6 Futures prices December 9 8 7 6 5 Futures prices August 5 6 7 8 9 5 6 7 8 9 Number of months to delivery 5 Sources: International Petroleum Exchange