E n S rv 119
C nt nt
r p t 3
Int rn t n l n 5
v l p nt n th OEC r 5
v l p nt t d th OEC r
Int rn t n l r t 9
r n n 1 v l p nt n 1995 1
O tl f r 199 nd 1997 13
E n p l l nd r 1995 Kn t . Alf n: A r n G — n d t? 33 r h p bl t n n En l h App nd x t n l nt f r r 5
h t ff d t f r nf r t n d n th p bl t n 6 br r 6.
In r h ld b d r t d t Kn t M rn r M tt ll nd
E n S rv
Ed t r l b rd Ol v j r h lt ( d Kn t Alf n l l A l n A h C pp l n S lv Gl r l Kn t M rn r S l nd Ed t r l t nt W n h rz tlf 9 7 t l f x 11 1 3 n Enz n r n r nt l h rt tr Ed t r l ddr St t - t r r h p rt nt O x 131 p - 33 O l S l - nd b r pt n rv O x 131 p - 33 O l t l 9 t l f x 9 7
E n S rv p bl h d f r t r b th r h p rt nt f St t t r h r h p rt nt t bl h d n 195 h p rt nt h b t 9 -1 pl ( n r 199 h r h p rt nt t d r n z d n f r d v n d f p rt nt Ol v j r h lt.
• v n f r bl E n • M r n v n r t r f r h l M rt n St l n r t r f r h Adn C pp l n
- bl n t x - n l n l - b r r t n l - M r n d l - M r l t n d l - G n r l l br d l
• t r l r v n • M r n tr v n r t r f r h Kn t . Alf n r t r f r h l r n A n
- Env r n nt l n - C n r nd pr d r b h v r - Int rn t n l n r r t - In d tr b t n n l - tr l nd n r n l - E n tr th d
h n xt d t n f E n S rv ll b p bl h d t th nd f n 6.
S b l n bl S b l t n t v l bl t f r p bl t n
l r v n l r pr l n r f r Economic Survey 1/96 E n rv 1995 E n rv
r p t
It n pp r th t nl nd r h p d l l p th b th f r n nd d t f r ntr b t n t rb n th p n r n tr d n p rtn r r rd d l r r th n 1995 th n n 199 nd n d r bl l r r th th n pr j t d n r tr - l nv t nt f ll f r th nd n t v r nd f l p l ntr b t d t r tr n n th r n d nd h f ll n nt r t r t h h nt l f r th pt rn thr h 1993 nd 199 v rt ll t h lt l t r nd h h ld d nd r t n t bl l r p th n n th pr v r A xp t d nl nd f x d nv t nt n r t d th tr n t p t t d nd n 1995 ntr b t n t nl nd G r th h h r n ll h h r th n th v r f th pr v 3 r p t th r r n tp t p r d th n r rl r n pl nt nt n d t d d n th th n pl nt r t t t l t l v l n 19 v rth l th r n n f nt h n n r th nd t f th fl t t n r rd d n th r t f pr nfl t n v r th p t f r n b r b d t nd r t t x h n nd th d l n n nt r t r t
C l l v nt n th r n n h v tr d t n ll r fl t d nt rn t n l n d v l p nt h r th f th p tr l t r nd d r l t n f r d t nd f r n x- h n r t h v r ntr b t d t d v r nt l l tr nd n r n th 19 Ev n th h n r th n th p t f v r h n r ll b n h h r n r th n n r n tr d n p rtn r l l tr nd n th r n n h v b n r n hr n- z d th th f r tr d n p rtn r th n n th l t h lf f th 19 v l p nt n th r- n n thr h 1995 th n p l pr r f r th p r d h d nd pr j - t d nv t nt n th p tr l t r d n t nd t th t th t t n ll h n t n xt nt v r th n xt f r In l n th th r th n th nl nd n l l t b l htl l r n 199 th n l t r On n nn l b n pl nt ll pr b bl d l n f rth r h l th ppr v d nd r t t x pr r ll h lp t r d pr nfl t n t b t 1 1/ p r nt th r h n rl n p r nt p nt b l pr j t d v r pr nfl t n n r n tr d n p rtn r W th n h n n th x h n r t r n th nd r t t x pr - r f r 1997 h v r th r r n t b l v th t pr nfl t n n r ll b r n p r th th l v l n tr d n p rtn r ntr n xt r
A ll ntr th p l z d tr t r f nd tr b d n nt rn t n l tr d n d nd v rt ll fr p t l v nt th p b l t f r r n r th - nd n - p l l n th l htl l n r r n - l r l d p nd n d v l p nt n th nt rn t n l n v t n fr nt rn t n l tr nd r pr r l r l t d t r tr t r f nd - tr h h d ff r fr th t f r tr d n p rtn r h n rt nt t d th n d v l p nt n r - h n d r rd n p n nt f n p l - th r f r l l t d t th p b l t f br pt h n n th p t n r t d b th nt rn t n l - n In dd t n t nt rn t n l l l d v l p nt t n t r l t p nt t thr h f r h n n tr d p l r l pr h nd nt r t nd x h n r t h
h EEA A r nt h h nt f r n 1 n r 199 n f v r l r nt pr v - d n th p r t n nv r n nt f r r f t r tr d r l t n nd l th r nt h h h h d th r t t nt t t v ff t h GA A r nt h h nt f r n 1995 h f r-r h n n n f r l b l tr d nd l n p rt nt l nt n th fr r nd t n f r r th r nt h v tr n t n l rr n nt nt l n th t th f ll p t ll n t b f lt nt l r h v l p d h tr d p l ff t f n t b n b r f th EU h v l r l b n ff t b th EEA r nt ( nd t d b l l t n d b St t t r b f r th r f r nd W th th EEA A r nt b th tr d -- r l t d dr b f r n n-EU b r h p nn t b d t b r t r th n th dv n- t S n f n tr d b rr r nd d r n t n f r n xp rt thr h d p n - 3 E n rv 1995 Economic Survey 1/96
pl nt t nd t h v r th tr t d dv nt f b n ll ntr th n d r- bl tr d d p nd n n th EU And th f t th t th EU nn t x tl b h r t r z d f t- r n r l nd t th t r tr d r l t n th th r ntr h ld b r br dl b d f r x pl b f n t r t r xt nt n r n r t n A
h d t f r th pl nt t n f th EU M tr ht r nt n n t r n n l ppr h n v n th h d bt t ll b n xpr d b t th f b l t f pl nt n th d - n If d v l p nt n th r n n v n t p th th f r tr d n p rtn r t b dv nt t nd t n x h n r t p l h h l n r l l t n t r n n A l n h h t tr n h v r ld r t n d r bl pr bl f r nd t tr d n p rtn r r xp d t tr l h f r x pl z bl nd l t n d l n n l pr
tr l t v t r th t p rt nt n l r n f r th tr n p t n f th r n n p rtl r lt f l r rr nt r v n nd p rtl thr h th p t n r t d b p tr l nv t nt t th r t f th n ll n r f v r d v l p nt th p tr l t r h d f n t v l nt r d h rv t n ph h h r lt n v r b t nt l p tr l r v n n th r h d h t t f r p tr l r rv r n t ntl b n r v d p rd th n t n l lth n r n n d r bl n p t f h h rr nt pr d t n
h n rt nt t d th l pr n v rth l t ll pl n p rt nt r l f r th r n n A r lt f h h r pr d t n r nd th r l-pr d n ntr h v ntr b - t d t x rt n tr n pr r n O EC th r t r l l h d f f ll n pr h h f r p r d l d t l r t rn f r h h- t ntr l r h r l b br - thr h n nt rn t n l n t t n n l t p l r r lt n n d n rd pr r n pr d r pr f r l nd On th th r h nd t hn l l dv n h v d t p bl t r d pr d t n t nd th r b n r th r v r r t h r n n th r - f r r r l nt t b t nt l f ll n l pr t d th n t t n r
h l r t n f p tr l pr d t n b p r v d b ld tt pt t r d f t r pr n rt nt b r p n th b n f t l p bl If th f l th t b t nt l f ll n pr p tr l r v n ll tr n l t nt n d r bl rpl n th b l n f p - nt nd n th v rn nt b d t th ft b ld- p Of r r n th tr l nd r lt h ppr pr t n f tt n d th p tr l r v n t h v br d pp rt h n nt f th r n n thr h p r d f rpl nd l t n f nd r r - f t r f th r n n h h nd r r th d ff r n b t n r nd l t ll EU ntr - pl n d r bl d nd n b d t r d pl n nd x h n r t t b l t h l t n f r r n th tr l nd nt l r d tr b t n f n t n l lth fr n t r l r r p t l f h h t th nt r t h v n b nd n t f n n l p t l f h h h v r l t v l l ttl p r d th r t t l n t n l lth h ll r d th n rt nt nd th v ln r b l t f th r n n
In th h rt nd d t r th n r n f r l t n r r n th tr l nd l n d t th n d r t n f r nd r n t b l z t n p l An n r n d nd r lt n fr th rr nt f t d b t nt l r v n ld n nd r n d r bl pr - r n th n nd r lt n r t r v ln r b l t n nn t n th n f ll n l pr W th z bl tr l nd t ll l b h t r f r r th n f r th r E r p n n- tr t p n f l p l nt xt th th n f th p p l t n n 15- r t U n l r v n t t h n th n h r t r z d b h rt f l b r r lt f th n f th p p l t n h v r v r t th pr r nd tr t r l pr bl n n r d f l r v n t d h b n b n l d n th f r f ll- d t d l b r f r nd n d pt bl n th r f r f r t t p rt n f r nh n n r b l t t p th th n f th p p l t n nd th r h ll n
h r t t l n -t r h ll n h v r pr b bl r l t t th nv r n nt b tt r ll tr - t n n b f nd f th p rt n f p l d t f rd n th ntr l n -t r nt r- t th n th r nh ff t nd t p t nt ll f r-r h n ff t h nd r r b th th - p rt n f l n -t r pr t n r p l nd f th l b l n t h h l l l n r- t v t l nt r t t ntr l t d th ph r f r tr d t n l p rtn r
Economic Survey 1/96 E n rv 1995
Int rn t n l n
v l p nt n th OEC r cent. According to most forecasts, GDP will rise by about After economic activity in the OECD picked up markedly 2.5 per cent this year, while a normal cyclical path would in the course of 1994, total growth was expected to rise imply stronger growth in 1997. The steep rise in invest- further through 1995, albeit with divergent growth rates be- ment the last three years, particularly in machinery and tween countries. While a cyclical peak had already been equipment, should in the long run provide a basis for passed in Anglo-Saxon countries, a buoyant upswing see- med likely in continental Europe at the beginning of 1995. Later in the spring and summer, however, short-term data E n f r t f r r n tr d n p rtn r showed that the expectations of an economic upturn in ma- Ann l p r nt h n
jor EU countries had been too optimistic, and forecasts 199 1995 199 1997 were revised downwards continuously through the autumn.
The downward revision is embodied in the estimates for USA • the international economy presented in Economic Survey G 1 3 3 5 no. 4/95, and as the table shows our assessment of the r v t n pt n d fl t r 3 1 Sh rt t r nt r t r t (l v l 7 5 9 5 5 5 5 situation for Norway's main trading partners has not changed significantly since then. GDP growth for our p n 0.6trading partners is likely to be about 2 per cent in 1996, G 1 7 edging up to a projected 2 1/2 per cent in 1997. r v t n pt n d fl t r 7 - 1 Sh rt t r nt r t r t (l v l 3 1 1 5 1 1
After monetary policy in the US was tightened consider- G r n ably through 1994, economic growth gradually slowed. G 9 1 9 1 7 5 While GDP grew by 4.1 per cent in 1994, preliminary esti- r v t n pt n d fl t r 1 1 1 mates for 1995.show a rise of 3.3 per cent (measured in Sh rt t r nt r t r t (l v l 5 3 3 1 1987 prices). Revised national accounts figures for the first r n half of 1995 indicate, however, that the growth rate for the G 9 1 9 year will be revised down. A further downward revision r v t n pt n d fl t r 1 7 1 3 7 may also be made as a result of the decision to change the Sh rt t r nt r t r t (l v l 5 7 5 1 way in which GDP is calculated. The budget conflict be- tween the Republican majority in Congress and the Demo- Un t d K n d G 3 9 cratic Administration, however, has led to delays in the na- C n r pr nd xl 3 3 2.5 tional accounts figures as a result of the closure of govern- Sh rt t r nt r t r t (p r nt 5 5 7 1 ment departments in two periods. Available short-term It l data from December and January point to a continued G 3 slackening of GDP growth. Unemployment has never- r v t n pt n d fl t r 3 9 5 5 5 theless only risen slightly and the rate is still below 6 per Sh rt t r nt r t r t (l v l 9 1 7 9
S d n
G 3 1 5 GDP-growth forecasts for Norway's main trading C n r pr nd x partners for 1994 - 1997 given on different dates 3 1 7 Sh rt t r nt r t r t (l v l 7 5 3 n r - G 3 7 7 - C n r pr nd x 1 5 5 Sh rt t r nt r t r t (l v l -
- h th rl nd G 5 1 9 - r v t n pt n d fl t r 1 1 9 1 9 1 1 - Sh rt t r nt r t r t (l v l 5 7
1 - M 1 - G tr d n p rtn r 7 7 1 5 C I tr d n p rtn r 3 3 5 1 ECU nt r t r t 5 9 5 5 93 1 93 3 9 1 9 3 95 1 95 3 9 1
1 t l pr nd x n l rt nt r t p nt - r - r - - - - r - -II- r - S r IES nd St t t r t f r t f r t f r t f r 199 1995 199 1997 t n l r f r S d n nd n r
S r C n n r t
5 E n rv 1995 Economic Survey 1/96 higher trend growth in the US economy than we have wit- ing to Europe. GDP growth slowed markedly in Germany nessed the last ten years. and France towards the end of 1995, and forecasts for this year have been subject to sharp downward revisions. During the second half of 1995 it became apparent that the Unemployment has shown a pronounced rise in the same cyclical slowdown in the US was in the process of spread- two countries. In the UK and Italy, economic growth also
h EU r d t n t r n n
A rd n t th M tr ht tr t th EU ll d d t th G n r l v rn nt b d t d f t n r l v rn- b nn n f 199 h h b r t t r l bl f r p r- nt r d bt nd n r pr nfl t n t p t n n n nd n t r n n (EMU fr 1 n r 1999 h d n ll b b d n h th r th d t G v rn nt C n r pr ntr n 1997 t f th nv r n r t r t t n d f t l r d bt l inflation th M tr ht tr t h r t r nt l th t th n r l v rn nt b d t d f t h ll n t x d 3 p r nt f 1995 1997 1995 1997 1995 1997 G nd f th tr t tr tl nt rpr t d th t th n r l A tr 5 5 v rn nt r d bt t n t x d p r nt f 71 5 l 5 G M r v r nfl t n t b n r th n 1 5 p r nt- 3 5 13 13 1 5 n r 73 p nt b v th v r f th thr l t nfl t n 5 7 5 7 nl nd 5 5 5 1 r t n E r p nd l n -t r nt r t r t t b n r n 5 r th n p r nt p nt h h r th n th v r f 9 51 5 5 1 9 1 G r n th l - nfl t n ntr In dd t n th r l 9 5 59 3 1 Gr 9 3 7 3 11 113 1 7 r t r n t p l t n th t th b r t t h ll n t h v 9 Ir l nd 7 1 3 5 9 7 9 5 d v l d t rr n f r t l t t r b f r p rt p - It l 7 5 1 9 1 3 5 3 7 n EMU t n x b r 7 3 1 9 5 th rl nd 1 3 1 7 77 A rd n t th f r t f th EU C n fr rt l 5 1 7 5 7 9 3 3 v b r l t r nl f r ntr - G r n r n Sp n 7 3 5 9 3
th UK nd x b r - ll t f th r t r n th S d n 7 3 1 3 79 d bt r t nd b d t d f t h f r t nt l d l n Un t d K n d 5 1 5 5 53 9 n th b d t d f t f p r nt p nt fr 1995 t 1997 b th f r th UK nd r n th t h n n f l 1 r nt f G p l th r th n th lr d pl nn d h d f t n S r EU-C n h O tl f r th C n t E n 1995-1997 r n xp t d t b r d d r lt f r r n - z t n f th l r t t h l d r t n - In l d n Ir l nd th r r th t th nt nl f v r - r th nd nt n d d l n n n pl nt r l t v l l r nd d t f r EMU nd t l l th t r d t b ff nt t r d th d f t n th UK l b r l nt rpr t t n f th r t r b ppl d v n W th th pr p t th t r th ll b l r th n t t d th h p l t ll th r ll pr b bl b d r nt b t b th C n f l p l t ht n n ll pr b bl b th tr t If th r ll n n t n l d ntr n r t h v th b d t r t r n A r lt f th d bt r t f p t p r nt f G th f r t l h n tr nd n G r n t rd th nd f f th EU C n nd t th t nl It l Gr nd n t t d t l t r th b d t d f t f r 1995 l ld b x l d d fr p rt p t n n EMU 3 p r nt 7 p r nt p nt h h r th n th EU r lt f x v d bt If v rl th p b l t th t n- C n f r t h G r n G v rn nt t t fl t n n Sp n b l ttl t h h n 1997 th b d t f r th b d t d f t n 199 h l b n r v d p- d f t ll th n b th l t n f t r f r A tr rt l f G rd t 3 5 p r nt Sp n nd p bl S d n S n th b d t d f t b r d d r l t v l ftl ( nd n d r bl f t r th n th Ir l nd nd h f r t l h th t n r nl nd f r p bl d bt th ntr ht j n EMU th th th rl nd ll t f th b d t r t r n h l th d f t r d ll r d d t l th n 3 p r nt f G d f t n l nd S d n ll r n ll x d 3 p r nt f G r th ntr th nt rpr t t n f th In dd t n t t f n th nv r n r t r h n- tr t t xt ll b d v h M tr ht tr t t t th t tr t nt t j n EMU h h nt l n th r th d bt t b " ppr h n th r f r n v l t th n tr n t n t n l rr n " r " Ev n h n t f t r p " A rd n t th f r t h v r th M tr ht tr t b n dr n p th UK nd n- Ir l nd th nl ntr n th x t d b v n r dd d pr t l ll n th t pt t f St 3 h h th d bt r t ( n p r nt f G ll d l n b- In th UK EMU b r h p t ll b th r lt f th t nt ll fr 1995 t 1997 nd h h th r b ll d t r n d b r f r nd r f th b r rt pr b bl b n d r d l bl f r n t r n n A l ht n th n xt p rl nt r l t n In G r n nd d l n l xp t d n l b t h r th f r r n th p l t l ll n th p rt f v rn n t rt t h h h l v l th t t d ff lt t n th t p rt n d r bl b t t l b n r t nv n th th d bt r t r n n b pt d In th th rl nd nd p pl f th dv nt f EMU n S d n th p bl d bt l l t d l n l htl v r th G r n n p rt l r b th n xt f d r l l t n ll b h ld n th t n n xt t r h l p bl d bt r n n r nd f 199 nd n nl nd n th p r d r n n rd r t pr v nt n tr nd nr t h h b th r lt f n f rth r n t ht n n
Economic Survey 1/96 Economic survey 1995
abated during 1995, and GDP is not expected to expand by 3 month ECU rate and growth in consumer prices more than 2 per cent this year. A common feature of seve- for Norway's trading partners. Per cent ral of the large European economies is that domestic de- 11 mand components have not sufficiently taken over as driv- ing forces once export effects began to wane. This must be viewed in connection with fiscal policy, which has largely been focused on reducing budget deficits and public debt in attempts to satisfy two key Maastricht convergence criteria. The orientation of monetary policy is therefore decisive for the possibilities of stimulating economic activi- ty in Europe. For some countries, however, monetary poli- cy's scope for manoeuvre is being limited by the Maast- richt treaty's criterion concerning a stable exchange rate. Without a clear, coordinated monetary policy stimulus, a new recovery in Europe will depend on growth impulses from areas outside the region. In this connection little 1995 1997 stimulus may be expected this year: growth in the US has slowed, and countries in Asia, particularly China, are - ECU rate CPI Trading partners projected to grow at a slightly slower rate than in the past few years. In addition, Japan is still struggling to emerge Source: Statistics Norway. from recession.
In 1995, Japan recorded its fourth consecutive year of low or negative growth, and the most prolonged period of stag- the spring of 1995, however, there were clearer indications nation since the Second World War has still not been re- that economic growth had started to slow, and the Federal placed by recovery. The recession started following a funds rate was therefore lowered to 535 per cent in July period of overinvestment and inflated property and asset 1995. Short-term data indicated a considerable slowdown prices at the end of the 1980s, and it takes time before in activity through the second half of 1995, and the Federal balance is restored in the economy. The Government has funds rate was reduced on two occasions: in December last attempted to stimulate the economy on a number of year and most recently in January 1996, with the reduction occasions through an expansionary fiscal policy. This stra- totalling half a percentage point. In the UK, which cyclical- tegy is being continued this year, with a weakening of the ly has largely followed the US, the central bank raised its budget position by 14 220 billion yen (about 3 per cent of base rate on three occasions between September 1994 and GDP). Monetary policy has also been very expansionary. February 1995, to a level of 6.75 per cent. Towards the end Against this background, GDP is projected to rise by about of last year, there were also signs of slower economic 1 3/4 per cent in 1996, edging up in 1997. growth in the UK, and the authorities reduced the base rate on two occasions over a short period. It now stands at 6.25 The forecasts indicate that price inflation among Norway's per cent. The German central bank cut its key rates on main trading partners will be about 2 1/2 per cent both in three occasions in 1995, most recently in December when 1996 and 1997, i.e. slightly higher than last year. Consu- the discount and Lombard rates were lowered to 3.0 and mer price inflation in Germany moved on a falling trend 5.0 per cent, respectively. This must be viewed against the last year and is projected at an average 1.8 per cent for background of economic data, which indicated somewhat 1995. The rate of inflation will probably slow further in weaker economic activity than expected earlier, and the 1996. In France and Sweden, indirect tax increases will re- slower rise in consumer prices and money supply growth. sult in slightly higher inflation rates in 1996. During this Historically, the discount rate is now at a very low level in upturn price inflation in the US has been more moderate Germany, and further stimulus from lower interest rates is than during cyclical upswings in the 1980s. The US labour therefore probably limited. Interest rates in other continen- market is still much more flexible than European ones, and tal European countries shadow German rates, with the ad- changes in health insurance have resulted in a lower rise in dition of a certain risk premium. Interest rates are at a parti- costs for employers. Against this background, price infla- cularly high level in Italy where a strong depreciation of tion is expected to remain moderate in the US both in 1996 the Italian lira prompted the authorities to conduct a con- and 1997. Japan has experienced a period of falling prices, tractionary monetary policy. A continued weak currency but consumer prices will probably begin to edge up in and rising consumer prices indicate that Italian interest 1996. rates will remain relatively high in the months ahead. In Japan, the economic slump over the past three years has The cyclical situation of the major OECD countries be- been met with gradual reductions in the discount rate, most came more synchronized in 1995 compared with the begin- recently to a record-low 0.5 per cent in September last ning of the 1990s, and this is reflected in monetary policy. year. The central bank is expected to maintain a low dis- In 1994, a boom was under way in the US, and monetary count rate until the economic recovery is firmly entren- policy was tightened considerably during the year. Later in ched.
7
Economic survey 1995 Economic Survey 1/96
v l p nt t d th OEC r W rld r d t pr d t This section is based on forecasts from the IMF and LINK Ann l p r nt h n l project drawn up last autumn, and sufficient consideration 199 1995 199 1997 has therefore not been given to the economic slowdown in Europe. As noted in the discussion above concerning Nor- IM IM I K IM I K I K way's main trading partners, total GDP in industrial coun- tries is likely to rise more slowly than indicated by the table. W rld 3 3 7 1 3 1 3
Lower economic growth in the OECD area will have a damp- Ind tr l ntr l 3.1 5 5 ening effect on developments in the rest of the world, pri- manly as a result of falling demand and lower commodity prices. E t rn E r p 5 3 -15.2 - - 5 1 9 3 5 Preliminary estimates show that GDP in eastern Europe Developing countries 5 3 5 5 5 7
combined rose by a little more than 4 per cent in 1995, and Afr 3 5 3 3 3
growth is expected to remain at approximately this level t n A r 1 1 5 the next two years. The relatively favourable trend, how- A 8.5 7 7 9 7
ever, must be viewed in connection with the more than 20 Ch n •• 9 9 3 per cent decline in GDP recorded by these countries in the nd t f r t period from 1989 to 1993. Based on current growth rates, 1 OEC - r x l d n M x the area as a whole will not reach the 1989 level before the n n l d l r l nd n r Sl v th Cz h p bl nd n turn of the millennium. There are also considerable diffe- 3 IM n l d r n -C nd C ntr l A n ntr rences between the various countries. Bulgaria and Roma- IM n l d Ch n n th A n r n I K tr t Ch n p r t r n nia recorded low growth last year, partly as a result of S r IM nd th I K r j t structural problems in the banking sector. As a result of po- litical pressures, the banks have often had to extend loans pessimistic, partly because several countries in the area are to insolvent state enterprises which have not implemented still involved in unresolved armed conflicts and have limi- reforms to any extent. A sizeable budget deficit has made ted administrative and political capacity to conduct a poli- it necessary to conduct a tight fiscal policy with ensuing cy which promotes growth. Over the next two years GDP low growth in Hungary. Those countries which at an early growth may therefore remain below average population stage in the reform process implemented macroeconomic growth, which is slightly higher than 3 per cent. stabilization measures and structural changes are now ex- periencing increases in production. This applies to Alba- Developments in Latin America last year were largely mar- nia, the Czech Republic, Poland, Slovakia and Slovenia. ked by the financial crisis in Mexico towards the end of The outlook for these countries points to continued high 1994. The stabilization measures introduced by the Mexi- GDP growth. can Government in the first half of 1995 resulted in a sharp decline in domestic demand. Preliminary estimates show Republics in the former Soviet Union (excluding the Baltic that GDP fell by 6 per cent in 1995. The forecasts, how- states) have experienced a dramatic decline in GDP in recent ever, point to positive growth rates this year and in 1997. years, but there are many indications that the decline came Argentina had a substantial supply of foreign capital at the to a halt in 1995. The forecasts indicate that output in the beginning of the 1990s. This flow was reversed in the area as a whole will expand by about 2 per cent this year. wake of the crisis in Mexico and made it necessary for the Inflation fell substantially last year, but is expected to re- authorities to introduce severe austerity measures which main at around 60 per cent in 1996, indicating the continu- led to lower growth and higher unemployment. Argentina ed existence of major structural problems in the economies. probably recorded zero growth last year, and only a weak rise is projected in 1996. Brazil, Chile, Colombia and Peru Throughout most of Africa GDP per capita has generally were not affected by the financial crisis to the same extent. fallen from one year to the next since 1980. Structural ad- These countries initially had a better balance in their eco- justment programmes drawn up by the IMF and World nomies, and in general a more favourable composition of Bank for Africa, and which most of the countries on the their foreign liabilities. Preliminary national accounts figu- continent - more or less wholeheartedly - have introduced res indicate that these four countries recorded GDP growth since the mid-1980s have thus far not resulted in a substan- of between 4.5 and 7 per cent in 1995, a trend which is ex- tial rise in growth. Considerable social and political instabi- pected to persist over the next two years. Registered price lity, a high debt burden and low foreign investment are fac- inflation in the region has slowed substantially, from near- tors underlying the weak economic trend. The IMF expects ly 500 per cent in 1994 to less than 20 per cent last year. some improvement this year, based on an assumption that Developments in Brazil made the greatest contribution to the countries continue the reform policy outlined in the sta- the decline, while price inflation in Venezuela had the op- bilization programmes. The LINK assessments are more posite effect. Venezuela has recorded a drop in production
1 The LINK project is an international forecasting project under the auspices of the United Nations, in which Statistics Norway participates. The forecasts for the world economy are drawn up on the basis of model-based calculations in which the various countries contribute macroeconomic models for their respective countries. In the model simulations, account is taken of the link-up between the various countries as a result of international trade.
8 Economic Survey 1/96 Economic survey 1995
the last few years and has accumulated one of the region's in commodity prices in 1994 contributed to boosting im- largest general government budget deficits. port capacity. Oil-producing countries, on the other hand, did not contribute to the increase in world trade, partly due Asia (excluding Japan) recorded considerable economic to the weak trend in crude oil prices. The prospect of lower growth again in 1995, with a combined rise in GDP estima- GDP growth in the OECD area, particularly in continental ted at about 8 per cent. Growth is expected to slow some- Europe, points to lower growth in world trade this year. what, edging down to 7 per cent this year. China in particu- However, as a result of an increased degree of internal lar helped to boost the overall growth rate last year, with a trade, NICs in Asia have become less dependent on ex- rise in GDP provisionally estimated at 10.2 per cent. How- ports to OECD countries, and developments in this area ever, this is still a decline of 1 percentage point from the will probably continue to make a positive contribution to previous year. The slowdown is a result of measures intro- growth. The forecasts point to an expansion in world trade duced by the authorities to curb the level of activity, which of a little more than 7 per cent both in 1996 and in 1997. must be viewed in connection with the fear of overheating following price inflation of more than 20 per cent in 1994. The price of crude oil North Sea Brent Blend was an ave- Inflation was reduced to 14.8 per cent at the end of 1995. rage $ 17 p/b in 1995, an increase of $ 1.20 from the pre- The NICs (South Korea, Hong Kong, Singapore and Tai- vious year. Global demand for crude oil rose by 1.4 mil- wan) and countries in Southeast Asia (Indonesia, Malay- lion barrels a day, the sharpest increase in several years. sia, Philippines and Thailand) recorded a combined Growth was particularly high in Asia, but there was also a growth rate of nearly 8 per cent in 1995. Growth rates are substantial increase in consumption in Europe. Oil produc- expected to decline slightly the next two years with total tion rose again in 1995, with the North Sea registering the GDP rising by about 6 1/2 per cent in 1997. Countries in highest growth. However, OPEC increased its production South Asia have not experienced the same upturn as coun- by about 0.5 million b/d in spite of unchanged quotas. tries further east. Preliminary figures indicate, however, Towards the end of 1995 cold winter weather in North that GDP in both India and Pakistan grew by around 5 per America and Europe contributed to a sharp rise in oil cent last year, and the forecasts point to growth of about 6 prices. The price reached $ 19 p/b at the beginning of per cent in 1996. 1996, but has since declined, partly because Iraq has ex- pressed an interest in discussing the possibilities of limited oil sales with the UN. The forecasts show that oil produc- Int rn t n l r t tion in the former Soviet Union is likely to increase this Growth in world trade slowed from about 10 per cent in year after declining for eight years. Other non-OPEC 1994 to about 8 per cent last year. The lower growth rate countries will probably also record higher production. must be viewed in connection with the economic slow- With the prospect of approximately unchanged growth in down in the OECD area. There are several reasons why demand from 1995 to 1996, the projections point to down- growth nevertheless continued at a stronger pace than earli- ward pressures on oil prices in the period ahead. er in the 1990s. Economic activity remained at a high level in Southeast Asia last year, and GDP growth in China con- After rising sharply through 1994, most commodity prices tinued at a double-digit pace. Imports in developing coun- levelled off in the first half of 1995 and prices edged down tries increased substantially, partly because the sharp rise towards the end of last year. According to the HWWA commodity price index, commodity prices, excluding ener- gy raw materials, rose by 0.9 per cent in the year to Decem- Spot price, Brent Blend Dollar per barrel ber 1995. Prices of farm-based raw materials for manufac- 20 turing industry increased by nearly 10 per cent. A sharp rise in the price of cotton, rubber and pulp in the first half 1 of 1995 boosted the rise, whereas in the second half of the year the prices of most goods in this category began to 18 drift down. Prices of food and beverages declined by about 10 per cent through 1995. While the price of coffee, tea 17 and sugar fell in the second half of 1995, the price of such products as wheat, rice and maize rose considerably follo- 1 fr wing several years when production was lower than con- sumption. Grain prices have increased both as a result of 15 poor weather conditions in grain producing countries and a sharp rise in demand in Asia. China, which previously was 14 the world's largest exporter of maize, now consumes its entire production. Metal prices, which increased sharply in 13 1994, also edged down in 1995. Among non-ferrous Jan Jul Jan Jul Jan 94 94 95 95 96 metals, aluminium prices made the greatest contribution to the decline, while there was a relatively stable price trend - Spot - Annual average for copper, nickel, tin and zinc in 1995. Source: Petroleum Intelligence Weekly E n rv 1995 Economic Survey 1/96
r n n
v l p nt n 1995 good 7 per cent. The decline in the volume of traditional According to preliminary figures from the quarterly natio- merchandise exports through 1995 must be viewed in con- nal accounts (QNA), gross domestic product (GDP) expan- nection with weaker economic growth among Norway's ded by 3.7 per cent from 1994 to 1995, after surging by 5.7 main trading partners. Preliminary estimates indicate per cent the previous year. The 3.3 percent growth in main- demand growth of about 5 per cent in Norway's export land GDP was also noticeably lower than in 1994. The markets last year, a halving of the 1994-figure. decline in oil investment, slower growth in demand from mainland Norway and a pronounced slowdown in traditio- While petroleum investment fell by around 12 per cent at nal merchandise exports contributed to curbing the upturn an annual rate from 1994 to 1995, mainland investment in the Norwegian economy from 1994 to 1995. Unemploy- expanded by a good 14 per cent. As expected, mainland ment nevertheless declined by half a percentage point on fixed investment made the greatest contribution to the an annual basis, approximately the same as in the previous growth in demand in the mainland economy. The rise in year. A higher VAT rate with effect from 1 January 1995 manufacturing investment is estimated at 35 per cent, the resulted in price inflation of 2.4 per cent. For the first time highest growth rate since 1962. Investment in dwellings in several years, Norway thus had a slightly higher rate of and in other private services also rose substantially even inflation than the average of her main trading partners. though growth rates were not as high as in the preceding year. Even though the expansion in mainland investment One problem when interpreting the preliminary QNA on an annual basis was stronger in 1995 than in 1994, there figures is the persistent rise in inventory investment over were clear signs of slower growth through last year, and the past three years. As noted in Economic Survey 4/95, the carry-over into 1996 is close to zero. this may indicate that QNA figures overestimate the growth in the supply of goods and services (production Consumption in households and non-profit organizations plus imports) or underestimate demand. Based on signs of (the new term for private consumption) showed clear signs slower growth in both production in mainland industries of slower growth through 1995, and the annual growth rate and in demand from mainland Norway, the figures never- is provisionally estimated at 2.7 per cent. In isolation, the theless indicate that the cyclical upturn in the Norwegian halving of new car sales from November to December re- economy is now becoming more moderate. duced the annual growth rate for household consumption by about 0.1 percentage point. Figures for new car registra- The rise in manufacturing production last year was ap- tions for December and January indicate that households proximately on a par with growth in mainland GDP. have adjusted to the announced changes in car taxes. Following brisk growth through 1994 and into 1995, manu- facturing output declined in the second and third quarters, Developments in resale home prices also provide an indica- but picked up moderately again at the end of 1995. Other tion of slower demand growth. Following a sharp rise goods-producing industries posted markedly higher gains through 1994 and an annual rise in real terms of nearly 12 than manufacturing industry in 1995, but growth in these per cent, it appears that house prices levelled off through industries was not particularly high through the year. The 1995. As an average over the first three quarters of last construction sector recorded a noticeable decline in produc- year, Statistics Norway's price index for existing dwellings tion through 1995, while there was an increase in the was in real terms about 5 per cent above the level in the power supply sector. Production in service industries rose same period one year earlier. Data from the Norwegian less than the average for mainland industries in spite of Realtors' Association indicate that the rise on an annual (moderately) rising growth through the year. basis will be about the same, or slightly lower.
Changes in manufacturing output are closely related to de- With a projected growth in household real disposable in- velopments in traditional merchandise exports and in petro- come of a little less than 3 per cent in both 1994 and 1995, leum investment. Following record-high growth from 1993 it is natural to view the slower rise in private consumption, to 1994, the volume of traditional merchandise exports house prices and housing investment in connection with peaked in the first quarter of 1995 and has since moved on interest rate movements. Households' average borrowing a downward trend. The level in the fourth quarter was rates in private financial institutions fell by nearly 2 per- about 1 per cent below the annual average. There were con- centage points from 1992 to 1993, and by an additional 3 siderable differences between the various commodity percentage points from 1993 to 1994. The decline in inter- groups, with continued sharp growth in exports of engi- est rates, however, virtually came to a halt in the second neering products and farmed fish, while exports of metals, half of 1994, and lending rates in the first three quarters of chemical raw materials and refined oil products showed a 1995 combined were only half a percentage point lower considerable decline. The prices of traditional export than in the same period one year earlier. goods showed relatively little change through 1995, but compared with the average level in 1994 the rise was a
10
Economic Survey 1/96 E n rv 1995
M r n nd t r Growth from previous period unless otherwise noted. Per cent
S n ll dj t d
199 1995 95 1 95 95 3 95
nd nd tp t
C n pt n n h h ld nd n n-pr f t r n z t n 7 - 1 -
G n r l v rn nt n pt n 1 1 1 - 1 -1 1
Gr f x d nv t nt 9 9 3 1 - 5 -9 3 11
- nl nd r 1 1 1 9 -1 5 -
-1 -p tr l t v t -7 - 1 3 3 1 3 n l d t d nd fr nl nd r l 9 9 1
Exp rt 5 3 7 -1 -3 3 1
- r d l nd n t r l 11 3 - - 3 1
- tr d t n l d 13 3 1 -7 9 9 -1
1 I p rt 1 3 -1 5 1 5 - tr d t n l d 15 9 3 3 1 7
Gr d t pr d t 5 7 3 7 - 7 3 1 1 7
- nl nd r 3 3 - 5 3 1 5 1 3
b r r t M n-h r r d 1 1 9 - 1 1 7
E pl d p r n 1 5 7
b r f r 9 1 7 1 3 Un pl nt r t l v l 5 9 5 5 1 3
r C n r pr nd x3 1 5 7 3
Exp rt pr tr d t n l d 7 1 5 7 -1 7 5 - 1
I p rt pr tr d t n l d 5 7 - 5 1 1 -
l n f p nt C rr nt b l n b ll r 1 1 3 3 11 5 1 5 7
M r nd t ( n dj t d l v l E r r n r t (3 nth I O 5 7 5 5 5 5 5 3 5
79 7 7 • Av r l nd n r t 3 1 7 5 113 1 1 3 Cr d l pr r 111 3 1 7 1 9 9 I p rt ht d r n x h n r t (1993=1 1 1 5 99 1 99 99 9 7 99
1 C n pt n n h h ld nd n n-pr f t r n z t n + n r l v rn nt n pt n + r f x d p t l f r t n n nl nd r h rt rl f r r b d n n ll dj t d nthl f r fr th b r r t rv 3 r nt h n fr pr v r h ld b rr n r t n pr v t f n n l n t t t n 5 Av r p t pr r nt l nd
Av r 1 -3 rt r S r St t t r
Over the past few years interest rates in private financial in- pared with the brisk growth through 1993 and 1994. These stitutions have generally shadowed movements in Norwe- imports showed no change from the third to fourth quarter. gian money market rates with a slight lag. Through the The development in traditional merchandise imports in second half of 1995 and so far in 1996 money market rates 1995 supports the impression of slower demand growth. have fallen noticeably less than corresponding ECU rates. The increase on an annual basis was slightly less than 9 Since the beginning of 1996 short-term interest rates in per cent, down from 15 per cent the previous year. Imports Norway have remained at a level considerably above corre- of engineering products, which in 1994 accounted for sponding ECU rates. more than 1/3 of total traditional merchandise imports in value terms, rose by about the same rate in 1995 as in Preliminary accounts figures for the general government 1994. It is natural to view this in connection with the vi- sector indicate a growth in public-sector demand of 1.2 per gourous rise in investment, while the slowdown in manu- cent last year, a good 1/3 of mainland GDP growth. Based facturing output contributed to lower growth in imports of on the accounts, it also appears that the general govern- raw materials and semi-manufactures. Prices of traditional ment surplus was equivalent to about 2 per cent of GDP in imported goods rose by 0.7 per cent from 1994 to 1995, 1995, against 0.4 per cent in 1994. and in the fourth quarter were only marginally above the average for the year. Due to the steep rise in export prices, The volume of traditional merchandise imports continued this resulted in terms-of-trade gains of more than 6 per to rise through 1995, but at a gradually slower pace corn- cent for trade in traditional goods.
11
Economic survey 1995 Economic Survey 1/96
Short-term indicators Seasonally adjusted and smoothed indices. Jan. 1993=100 According to preliminary figures from manpower ac- 112 150 counts, employment grew by 2 per cent last year. Manufac- turing employment rose for the second consecutive year, and there was a sharp rise in the number employed in con- struction, distributive trades and some private services. For the first time in many years the growth in employment in the public sector was noticeably less than the average for the economy as a whole. Whereas the labour force expand- ed at more or less the same pace as employment through 1994 and into 1995, growth was considerably lower through the second half of last year. As a result, unemploy- ment (seasonally adjusted) fell by more than 1 percentage point over three quarters, dropping to 4.3 per cent in the fourth quarter of 1995, the lowest level since the fourth quarter of The Directorate of — Industrial Exports — — — Imports 1988. Labour's figures for
production trad. goods trad. goods the sum of registered unemployed and persons partici- (right scale) (right scale) pating in labour market measures, excluding rehabilitation, Source: Statistics Norway. have also been declining since the first quarter of 1993, while the number of vacancies at employment offices has risen. Through the second half of 1995 and up to January this year, however, both indicators seemed to be levelling Short-term indicators off. Seasonally adjusted and smoothed indices. Jan. 1993 = 100 118 190 The consumer price index rose by 2.4 per cent from 1994 to 1995. This is approximately the same as the price infla- 116- -180 tion recorded from 1992 to 1993, but 1 percentage point -170 114- higher than from 1993 to 1994. The fluctuations in the in- -160 112- flation rate for these years can largely be ascribed to two -150 factors. First, the general decline in interest rates contribu- 110" -140 ted to a very low rise in house rents from 1993 to 1994.
108 - -130 Second, changes in indirect taxes boosted the rate of infla- 106- tion from 1994 to 1995. Adjusted for these factors, price in- -120 flation has shown little change through the period. Infla- 104- -110 tion in Norway abated through 1995. The annual average, 102 - -100 however, was marginally higher than the inflation rate re-
100 f ,,,,,,, 1111 11111111 • • , 90 corded by our main trading partners, but less than the rise 93.1 94.1 95.1 96.1 in prices in the ECU area. — Retail Cars — — — Housing sales (right scale) starts (right scale) The Norwegian krone appreciated against an import- Source: Statistics Norway. weighted basket of our trading partners' currencies through 1994 and into 1995, and this helped to slow the rise in prices of imported goods. Measured by this ex- change rate indicator, the Norwegian krone appreciated on Two capital formation indicators. Seasonally adjusted an annual basis by nearly 2.5 per cent. If exchange rates and smoothed indices. 1. quarter 1990=100 remain unchanged until the end of 1996, the import- 150 weighted krone exchange rate will show little change from 140- 1995 to 1996. 130- Preliminary figures show an increase in wages per normal 120 - man-year of 3.3 per cent last year, marginally higher than 110 - in 1994. Measured per man-hour worked, however, wage 100- growth rose from 3.0 per cent in 1994 to 3.9 per cent in 1995. The higher growth in wages per man-hour worked 90 - can be ascribed to a slight rise in absenteeism and the fact 80 - that there were two fewer working days in 1995 compared 70- with 1994. Manufacturing industry recorded slightly higher wage growth than the average for mainland 60 , 1 I II 1 I 90.1 91.1 92.1 94.1 Norway, while wage growth in the general government
— Manufacturing Building starts, sector was below the average. investment ex. housing Source: Statistics Norway. 12
Economic Survey 1/96 E n rv 1995
The current account of the balance of payments showed a 1995/1996 followed by a new upturn in the course of surplus of a good NKr 32 billion last year, equivalent to 1997, it is assumed that some of these prices will resume 3.5 per cent of GDP and about NKr 10 billion higher than an upward trend during 1997. The rise in import prices, in 1994. The trade surplus widened by NKr 3 billion, while which are dominated by prices for processed manufactured the deficit on the interest and transfers balance fell by goods, is expected to show little change, but because the about NKr 7 billion. Based on the financial survey's (import-weighted) Norwegian krone appreciated slightly in estimates for assets and liabilities in nominal terms, net 1995 the rise in import prices may pick up in 1996. On the foreign assets are estimated at about 2.6 per cent of GDP at other hand, international price inflation is expected to ease, end-1995. Norway thus became a creditor nation in the which would point to a reduced rise in import prices. All in course of 1995, for the first time since 1946. all, the rise in import prices is not expected to show much change in 1996 and 1997 compared with the rise in 1995. O tl f r 199 nd 1997 Most economic indicators now point to weaker economic M n n nd t r growth in 1996 than in the two previous years. Economic Percentage change fr pr v r nl th r n t d
Accountsgrowth among our trading partners is moving on a down- S 1 M SN 1995ward trend with moderating effects on Norway's traditio- 199 199 199 1997 nal merchandise exports. Investment growth in the main- land economy, which had a positive impact on growth in nd nd tp t 1995, is showing signs of levelling off. The impetus from C n pt n n h h ld nd n n-pr f t r n z t n 7 5 3/ 3 petroleum investment to the Norwegian economy will G n r l v rn nt show little change in the period ahead and government ex- n pt n 1 3 1 1/ 1 3 1 penditure on goods and services is also expanding at a slug- Gr f x d nv t nt 9 3 3 1/ 3 3 gish pace. Growth in household consumption, however, - nl nd r 1 1 3 3 3 5 will remain buoyant with growth rates broadly in line with - p tr l t v t -1 3 -9 -9 3 nd fr nl nd the growth in household income. Unemployment is likely r 2.4 3 1/ 3 to continue to fall, but probably slightly less than in the Ch n n t previous two years. With the likelihood that inflation in (p r nt f G 1 1 - 1 1996 will be noticeably lower than in 1995, and almost Exp rt 3 7 7 1 73/4 8.8 3 1 1/ 1 5 down to the level recorded in 1994, real wages will rise at - r d l nd n t r l 3 13 5 - tr d t n l d 3 1/ 5 a somewhat faster pace in 1996 than last year. The current- I p rt 1 3 9 1 3 account balance will show a markedly higher surplus in - tr d t n l d 9 3 5 3/ 7 3 7 1996 than in earlier years and the general government sec- Gr t r d t 3 7 3 7 3 tor will also increase its net lending substantially. - nl nd r 3 3 3/ 7
b r r t r n pl d 1 5 1 1/ 1 5 1 1 Projections for international interest rates, com- Un pl nt r t (l v l 9 5 1/ 5 modity prices and market growth r nd The cyclical slowdown which spread to most of the OECD area in the course of 1995 is expected to persist in 1996, W p r n-h r 3 9 3 33/4 3 3 W p r t nd rd n- r 3 3 3 3 3/ 3 3 3
with GDP among our trading partners expanding by about C n r pr nd x 1 2 per cent. This will result in slower market growth for tra- Exp rt pr tr d t n l d 7 1 -1 1 1 3 ditional Norwegian exports in 1996 than in 1995, and far I p rt pr tr d t n l d 7 1 1 1/ 1 1 lower than in 1994. The outlook for 1997 is naturally more l n f p nt uncertain, but it is assumed that a new upswing in the US C rr nt b l n (b ll Kr 3 3 39 7 and, to some extent, Japan will contribute to an export-led C rr nt b l n
upturn in Europe. This will result in higher market growth (p r nt f G 3 5 1 next year, cf. table. M r nd t The international economic recovery through 1993 and M n r t r t (l v l 5 7 5 Av r b rr n r t (l v l 7 7 7 5 1994 contributed to a pronounced rise in prices for a num- Cr d l pr Kr (l v l 5 1 5 9 1 7 3 1 7 1 5 11 ber of important Norwegian export goods. This resulted in Int rn t n l r t r th 9 3 7 1/ 5 terms-of-trade gains in 1995 and contributed to the sharp I p rt ht d r n growth in the country's disposable income. As a result of x h n r t -2.5 - economic slowdown which occurred through 1995, pri- the 1 r t rd n t r n n r r d tt 1995/ ces for a number of these export goods have begun to fall, M M n tr f n n f r t n l b d t b ll 199 a halt. Prices for traditional 3 C n pt n n h h ld nd n n-pr f t r n z t n + n r l or the rise at least has come to v rn nt n pt n + r f x d p t l f r t n n nl nd r Norwegian exports are expected to continue to exhibit a h ld b rr n r t n pr v t f n n l n t t t n trend in 1996, with declining tendencies for im- 5 Av r r n l pr d t n sluggish t v n nt l d pr t n portant export prices. With a cyclical slowdown in
13
E n rv 1995 Economic Survey 1/96
Exports The sluggish growth in the European economy has resulted 1990=100. Seasonally adjusted (QNA) in a downward adjustment in short-term interest rates in Seasonally adjusted and smoothed (KVARTS) Germany, and this has had an influence on interest rate 15 movements throughout the ECU area. In the National Budget for 1996, the Government indicated that Norges 1 - Bank would be permitted to increase foreign exchange reserves to some extent in order to maintain interest rates 13 - at the present level in an environment of a strong krone and a domestic upturn. Relatively high short-term rates in 1 - January of this year combined with an appreciation of the
11 krone exchange rate against the ECU may indicate that Norges Bank has attempted to make use of this leeway. In 1 " our calculations, however, we have assumed that this will not continue as the economic slowdown becomes more 9 I I i I i I apparent. Nominal interest rates in Norway are therefore 9 1 91 1 9 1 93 1 9 1 95 1 9 1 97 1 expected to be slightly lower than in 1995. As a result of — Total exports Exports of trad. lower price inflation in Norway, however, real interest goods rates (before and after tax) will rise slightly from 1995 to Source: Statistics Norway 1996. In isolation, this will curb consumption and housing investment. Housing investment, however, is also influ- Consumption and investment enced by prices in the market for existing dwellings and 1990=100. Seasonally adjusted (QNA) here the rise in prices in 1995 was higher, which is also ex- Seasonally adjusted and smoothed (KVARTS) pected to be the case in 1996. Based on a turnaround in the 1 5 international economy and higher growth through 1997, short-term interest rates abroad are expected to increase 1 - gradually next year. 115 -
11
1 5 - Moderate growth in government expenditure on goods and services 1 -
95 - The assumptions concerning fiscal policy are based on the 90- Final Budget bill, which estimates the growth in general government consumption at 1.3 per cent and in general go- 85- vernment gross fixed investment at 3.1 per cent from 1995 80 90.1 191. 1 191 1 43 1 1 1 9 1 1 19 1 to 1996. An attempt has been made to incorporate the ap- proved changes in the tax and excise duty programme. Gross investment — Private consumption Changes in car taxes are among the important changes mainland Norway which deviate from an inflation-based adjustment of Source: Statistics Norway volume rates. It was decided to reduce these taxes consider- ably, entailing that new car prices will on average fall by about 7 per cent if the tax reduction feeds fully through to Net wealth ratio, saving ratio and after buyers. tax real interest rate 1976 - 1996 5 10 5 oF r n 8 Positive contribution to growth from the petro- th r A / 6 leum sector
After declining substantially from 1994 to 1995, petroleum 35 ... 4 / - -...... ■ i / • investment is now expected to increase the next few years, . . 3 / 2 . although not so sharply that the level in 1997 will be on a I /
5 1 par with the level recorded in 1994. Petroleum investment is projected to show an overall growth of about 4 per cent , - i • in both 1996 and 1997. There will, however, be a shift in / 1 i • 15 % - .. d % i • the composition of investment entailing that the increase in 1 / • 1 \ / - volume will relate to foreign orders for 1996 and 1997 as a \ i -8 whole. 76 8 96
— Net financial Saving ratio — — - After tax real Both oil and gas production is expected to show a sharp interest rate wealth ratio growth from 1995 to 1996. Average oil production in 1995 (left scale) (bank loans) came to 138 mtoe, while the estimate for 1996 and 1997 is Source: Central Bank of Norway and Statistics Norway. now nearly 155 mtoe. Gas production is expected to rise
1
Economic Survey 1/96 E n rv 1995
by nearly 24 per cent from 1995 to 1996 and almost 17 per Gross domestic product and employment cent the following year. We have assumed an average oil 1990=100. Seasonally adjusted (QNA) price for Norwegian production of NKr 107 p/b in 1996, Seasonally adjusted and smoothed (KVARTS) against NKr 105 in 1995. The estimate for 1997 is about 125 NKr 110 p/b. These projections entail unchanged real oil prices from 1995 to 1997. 120-
115 - Weaker demand growth
Following two years of sharp growth in private sector de- 110 - mand in the mainland economy and traditional export mar- kets, the growth rate slowed markedly through 1995. 105 - Growth in private consumption and particularly housing in- vestment tapered off and the growth in traditional merchan- 100 - dise exports came to a complete halt. Based on the projec- 95 ted sluggish trend internationally, the contribution to 90.1 91.1 92.1 93.1 94.1 95.1 96.1 97.1 GDP,Main1.-Norwaygrowth from traditional exports is expected to be some- Total Employment what weaker in 1996, whereas oil and gas exports will in- crease substantially. Investment demand is expected to Source: Statistics Norway grow at a far slower pace in 1996 than in the previous two years. The development of the new main airport will gene- rate some growth impetus in 1996, but not in 1997. Accor- Consumer price index ding to the calculations, manufacturing investment, which Percentage growth from same quarter previous year expanded sharply from 1994 to 1995, will only increase 10 slightly the next two years.
8 - Housing investment moved on a falling trend through 1995, and the level in the fourth quarter was lower than 7 - one year earlier. Housing starts passed a provisional peak 6- in the fourth quarter of 1994. It is difficult to draw any 5.
clear conclusions based on developments through 1995 4 -
even though the figures towards the end of the year 3 . showed a slight rise. As a result of the rise in resale home 2 - prices and income growth on a par with the level the previous year, the calculations derived from the model 1 - show that housing investment will pick up again during 85.1 87.1 89.1 91.1 93.1 95.1 97.1 1996 even though real interest rates will show a slight rise.
Our projection of a moderately positive growth in housing - Norway Trading partners/ investment entails that housing starts must rise by 10 per ECU area cent from 1995 to 1996. Source: Statistics Norway, OECD and Eurostat December 1995 at 3 000 cars which are instead purchased Household consumption showed a slower growth rate at the beginning of 1996, this adds 6 per cent to the growth through 1995, even when adjustments are made for the in 1996. All in all, it is conceivable that new car purchases abnormal decline in new car purchases towards the end of will rise by 15-20 per cent from 1995 to 1996. The esti- 1995 as a result of expectations of lower car taxes in 1996. mates imply an approximately unchanged saving ratio for Consumption growth of 2.7 per cent in 1995 was approxi- households from 1995 to 1997. mately the same as income growth. Real wages are ex- pected to rise at a slightly higher rate in 1996 than in 1995. Combined with a continued rise in employment and some- Slower output growth in the mainland economy what higher real interest rates, the calculations show a con- Lower growth in both traditional merchandise exports and sumption growth in 1996 and 1997 on a par with the in investment combined with approximately unchanged growth in 1995. The reduction in car taxes will shift the consumption growth (total) will contribute to slower out- composition of consumption towards more car purchases put growth for the mainland economy in the period ahead. and a relative reduction in other consumption. If these In the previous two years, however, a sharp rise in invento- shifts in new car purchases from the end of 1995 and into ries entailed that output growth was higher than the growth 1996 are disregarded, the combined effect of changes in in demand. We do not have an adequate explanation for relative prices and real income will contribute to a growth this development. When growth in the economy is curbed, in new car purchases of about 10 per cent from 1995 to however, it is reasonable to assume that the rise in invento- 1996. It is difficult to estimate the magnitude of shifts in ry accumulation comes to a halt, or at least is curbed. Our purchases, but if we estimate the abnormal decline in calculations are based on the assumption that inventory in-
15 Economic survey 1995 Economic Survey 1/96 vestment in 1996 is the same as in 1995. In 1995, domestic Moderate price and wage inflation demand from mainland Norway grew by a good 4 per cent. In 1995, inflation in Norway, measured by the consumer According to our calculations, this growth will be about price index, was approximately the same as among our 2.5 per cent in 1996. The estimate for mainland GDP trading partners, after recording lower inflation rates since growth is thus a good 2 per cent in 1996 compared with 1989. Our estimates indicate, however, that in 1996 3.3 per cent in 1995. In 1997, we assume that mainland Norway will again record lower price inflation than our output will expand by about 2.5 per cent as a result of trading partners. Much of the increase in the rate of in- higher international growth. flation last year is ascribable to higher VAT rates. In 1996, an opposite effect will be felt as a result of reduced car As noted above, oil and gas production is projected to rise taxes. If the tax reduction feeds through in full to buyer substantially from 1995 to 1996. Total GDP will therefore prices, this will reduce inflation by a good 0.3 per cent expand by a good 3.5 per cent this year. Unchanged oil pro- from 1995 to 1996. The effects of an unchanged VAT rate duction from 1996 to 1997 may entail that total GDP from 1995 to 1996 will probably contribute to reducing growth in 1997 will be about the same as for the mainland annual inflation by the same margin. In addition, electrici- economy. The calculations also show that the growth in ty prices rose sharply at the beginning of 1995. This did manufacturing production will slow to about 1 per cent. In not occur in 1996, which in isolation will also help to slow 1997, manufacturing output is expected to increase faster, the inflation rate by 0.3 per cent. If all other inflationary on a par with the growth recorded in 1995 when it was a factors are kept unchanged from 1995 to 1996, price in- good 3 per cent. flation in 1996 will be a good 1.5 per cent, against 2.4 per cent in 1995. Based on projected low growth in employment in the gene- ral government sector, production will also increase only Two other factors, however, are worth evaluating more marginally. Employment in the defence sector has been re- closely. First, the calculations show a slight reduction in duced in recent years, and no particular changes are expec- productivity gains in 1996 compared with the growth in ted in the civilian central government sector. The positive 1995. In isolation this will contribute to higher inflation. growth will therefore come from a projected employment On the other hand, according to our models lower produc- growth in the local government sector. tivity gains also result in lower wage growth, entailing that unit labour costs will not increase to any extent. The con- sumer price index is thus projected to rise by 1.6 per cent Continued decline in unemployment in 1996. For 1997, the projection for inflation is 2 per cent, The sharp growth in the Norwegian economy has resulted with most of the increase ascribable to car taxes not being in a substantial rise in employment, measured by both the reduced again. The remainder can primarily be attributed number of man-hours worked and number of persons. to a slightly higher contribution from import prices. Unemployment has declined somewhat less than expected when taking account of the steep employment growth. Average hourly wage growth in 1995 is estimated at about This entails that there has been a sharp rise in labour force 4 per cent, with a slightly higher growth in manufacturing participation. Total labour force participation for women is industry. Annual wage growth, however, was only a little now higher than ever, while labour force participation ra- above 3 per cent, entailing that the increase in real annual tes for men are still substantially lower than the level recor- wages was about 3/4 per cent. Both hourly wage growth ded throughout the 1980s. Pure demographic factors are and annual wage growth are projected at about 3.5 per cent now contributing to a rise in the labour force of 13-14 000 in 1996. This would then result in an increase in real persons each year. From 1994 to 1995, however, the annual wages of nearly 2 per cent in 1996, or more than labour force rose by as much as 35 000 persons, or by 1.6 double the growth of the previous year. Three factors are per cent. Our estimates for 1996 and 1997 show a rise in worth noting in this connection. First, consumer price in- the labour force of a good 1 per cent, or about 25 000 flation will, as noted above, be reduced. This plays an persons each year. This entails a continued rise in partici- important role in explaining the growth in real wages in pation rates, albeit at a slightly slower pace than in 1995. the short run both in manufacturing industry and in the economy in general. Second, the rise in prices of Nor- With the prospect of more moderate output growth in the wegian manufactured goods will slow from 1995 to 1996, period ahead, employment growth will slow. The calcula- primarily as a result of the cyclical factors discussed tions nevertheless show that unemployment will continue earlier. Third, productivity gains will be reduced, also to decline, but at slightly slower pace than in the previous primarily for cyclical reasons. These last two factors entail two years. Employment growth is projected at about 1.5 that the "scope for wage growth", particularly in manufac- per cent from 1995 to 1996, against 2 per cent last year, turing industry, will increase less in 1996 than in 1995. while unemployment may be about 4.5 per cent. This annu- However, the level of wages in manufacturing is lower al estimate entails that we interpret the low unemployment than the level traditionally implied by the "wage scope" recorded in the fourth quarter of 1995 as a transitory low. because wages at the start of the recovery did not increase Employment growth will slow further in 1997 because this as much as the "wage scope". Some of the wage growth in increase usually lags behind an upturn in production. 1996 is therefore due to lags following the upturn. Deve- lopments in manufacturing wages are assumed to play an
16 Economic Survey 1/96 Economic survey 1995
important role for wage developments outside the manu- facturing sector in the model. The growth in real wages is therefore largely ascribable to the decline in inflation and lags following the sharp improvement in business profits, and particularly in manufacturing industry, during the upturn over the past few years. The decline in unemploy- ment therefore has little effect on developments in wages, according to the model, because the level of unemploy- ment remains high. Based on the higher growth in real wages which follows from the calculations, profitability will be reduced somewhat in 1996 compared with 1995, and most noticeably in manufacturing industry.
Rising current- account surpluses Norway recorded a current-account surplus of a good NKr 32 billion in 1995. With the prospect of slower domes- tic demand growth and rising oil and gas production, the trade surplus will widen substantially from 1995 to 1996. Furthermore, Norway became a creditor nation (measured net) in the course of 1995. In the period ahead Norway's interest and transfer balance will therefore improve. As foreign assets are gradually accumulated, this will contri- bute to higher current-account surpluses. The current- account surplus in 1996 is projected at about NKr 40 bil- lion, increasing to nearly NKr 43 billion in 1997. A sub- stantial part of this net lending will take place in the public sector inasmuch as such a high share of the petroleum reve- nues accrues to the state.
17
E n rv 1995 Economic Survey 1/96
A p r n f b n l 19 - 19 nd 1991 - 1997
ll n v r l r f r l t v l l h d v l p nt nt n th r d t r t h v n v rth l b n n p r- th r n n xp r n d v r r v r t - t nt f t r b h nd th xp n n h t h v r th rd th nd f 1993 M nl nd G r th pr v n l- p t fr th d l n n E r p n nt r t r t l t t d t p r nt n 199 nd 3 3 p r nt n h h pr v d d b f r h lv n f r l nt r t r t n 1995 Gr th r t f th n t d h v n t b n n r fr 199 t 1995 C b n d th th p n n n th p r d 19 -19 h b n th d-19 th US th d l n n nt r t r t l n p rt nt h v r d d b v r l r f t n t n nd f t r b h nd th l l t rn r nd n E r p n 1993- v n d l n n pr d t n nd d nd n th nl nd 199 h r n d nd nd pr d t n n p rt nt n h l v r th n xt t r xp t r th tr d n p rtn r ntr ntr b t d t r rd-h h r th t nt n lb t t l htl l r p th n n th pr - n xp rt f tr d t n l d fr r h l th v t r A b f r v l t n l r t nd d l n n nt r t r t t l t d pr v t n pt n nd d ff r n b t n l l d v l p nt n th 19 nd h n nv t nt r d t n n th nl nd n 199 pr nt n th d r b l v nt n xp nd d h rpl nd nv t nt r th n nl nd r n v r bl thr h th p r d r l h h thr h 199 nd nt 1995 h l 19 -19 nd 1991-1997 Inf r t n f r th p r d p tr l nv t nt d n t v ntr b t n d r n 19 -19 b d n th ld n t n l nt h l th th pt rn f r f r th r 1991-1995 r bt n d fr th r v d n t n l nt n t E t t fr th r l n r n t n l nt f r f r 1995 nd t th t r n pr j t n pr nt d n th f th r th r t n d l n n b t rd n t t - E n S rv r d f r 199 nd 1997 t f r 199 nd 1997 t nl l th t ll r p t - t n f th d p r n r rd d t th nd f th r f t r d v r tr n ntr b t n t th l l 19 rt f th xpl n t n f r th th t th pt rn h pt rn n th f r t h lf f th 19 An p n n th US l b n f r r th t nd pr v t t r f n n n r t d n p t t r d xp n n n tr d t n l r t ll n r n bl b l n h ll tr t d b d v l p- r h nd xp rt fr 19 t 19 3 A br r th n nt n th h h ld v n r t h h h d l ttl p tr l nv t nt n 19 3-19 nd th d ntl n f h n fr 199 t 1995 ft r d l n n d r t l th nt t t v r d t r l t n r nd th nd f 19 3 pr v - pr v r In ntr t t th l t pt rn f l p l h d d f rth r t l t h h r pr d t n n th nl nd ntr b t d t rb n th l l ff t nd f r n - n th b nt r n nv t nt M r v r r l v rn nt b d t h v n t b n f d th th f l p l v d n r xp n n r d r t n n th dj t nt pr r l th f ll n th l pr f ll n l t n r 19 5 In dd t n r lt f th d r l - 19 5/19 rth r r n pl nt n t bl t n f th r d t r t h n n nt r t r t nd n l r n th f r t h lf f th 19 th n n th f r t h lf f th v l f f x d t pr b bl t r t r nfl n n th 199 l t v l t bl x h n r t nd h h n - h h ld b h v r th n rl r S n th ff t f th pl nt t th b nn n f th r v r h v ntr b t d h n n th r d t r t f r t t r l z d n th t t d r n n l tr nd thr h th f r t h lf f th f th th r t h th pt rn pr l n d h x- 199 th n t n r rl r Gr th n r l h pt n ll h h r th n pr v t n pt n n 19 5 r n d n th r f 1 t 1 3/ p r nt l n n p rt nt f t r b h nd th h rp r n nl nd G 199 nd 1997 ll pr b bl r b l ttl r th n th th t r v r f th thr pr d n r b t th n t l l t r lt n n nd r b l n n th n h pt rn n 1993-199 rr d th t n h - v l nt t th d r l t n f th r d t r t v l p-
GDP mainland-Norway Traditional exports Percentage growth Percentage growth 6 14
5 12 10 4 •• 8 3 6 2 4 1 2 0 0 • -1 -2
-2 -4 82/91 83/92 84/93 85/94 86/95 87/96 88/97 82/91 83/92 84/93 85/94 86/95 87/96 88/97
- - - GDP, 82-88 - GDP 91-97 --- Export 82-88 - Export 91-97
Source: Statistics Norway. Source: Statistics Norway.
1
Economic Survey 1/96 E n rv 1995
Accrued investment in oil activities Private consumption Percentage growth Percentage growth 80 10 70- 8 60- 50' 6 40. 4 30' 20. 2
10. 0 O -10- • -2 - 5 -4 82/91 83/92 84/93 8594 86/951 87/961 88/971 82/91 83/92 84/93 85/94 86/95 87/96 88/97• --- Oil inv. 82-88 - Oil inv. 91-97 - Consumption 82-88 - Consumption 91-97
Source: Statistics Norway. Source: Statistics Norway.
Gross investment in mainland -Norway Households' savings and real after tax interest rate Percentage growth Per cent 20 10 8 15" 6 10' • 4 • • 69— — • 2 • • • • ...... ••••• ■„., i • 0 el' " • / • . / -2 e . e \,...... / / e -4 /
-6 -10 82/91 83/92 84/93 85/94 86/95 87/96 88/97 82/91 831921 84/931 85/941 86/951 87/961 88/971 - - - Saving 82-88 - Saving 91-97 - - - Investment 82-88 - Investment 91-97 - Interest rate - Interest rate
Source: Statistics Norway. Source: Statistics Norway.
Annual earnings and consumer prices Unemployment Percentage growth Per cent 12 6.0
5.5.
5.0 -
4.5.
4.0"
3.5. / 3.0. ■ ■ ■ 2.5. ■
82/911 83/92 84/931 85/941 86/95 87/96 88/971 2.0 82/91 83/921 84/931 85/941 86/95 87196 88/971 - - - Prices 82-88 - Prices 91-97 - - - Wages 82-88 - Wages 91-97 - - - Unemployment 82-88 - Unemployment 91-97
Source. Statistics Norway. Source: Statistics Norway.
19
E n rv 1995 Economic Survey 1/96
r t r St t t r f r t f r 1995?
h E n S rv p bl h d b St t t r v r r th A r t b n p r nt p nt n 1995 In l - th p t t r h v pr nt d f r t f r r - t n h h n n nd r t t x nt l th t r pr j - n d v l p nt n 1995 n ht t h t n f n r pr nfl t n ll r b 3- p r nt f r t f r t r pr nt d n E n S rv 1/9 nd h n r n th nfl t n pr j t n fr E n S r- th f ll d b f r t n h rt rl rv h v 3/9 t /9 th pr r l b d n nf r t n n- t bl b l h h St t t r f r t f r rn n p l h n h pr j t n l nt l d th t 1995 h v h n d v r t n nf r t n h b n th f r t f r th r l r th n pr v t n pt n r v d r d d l htl h nd n f t r th pr j t n f r nt rn t n l n d v l p nt h h nfl n h r n p rt l r f t r n rn n th f r t f r th f r t f r nt r t r t r t r th br d nd 1995 h h nt l th t th t t r r d ff lt t h n n pr f tr d t n l xp rt d In l n th p r th r th n th rl r r n 1995 th pt h h r d ll pr d nt rn t n l St t t r p bl h d n r v d n t n l nt r th th r d nt thr h 199 t nt rn - f r nd th rt rl t t f r th r b d n t n l f r t r r d th r pr j t n f r G r th th n t nd rd r f r t t rt d n S pt b r th r O r f r t l r l f ll d th tr nd th th x pt n h d l d t dr p th f r t h v n t b n f th nd f th pr j t n p r d h n nd rt l br t d t th n n t n l nt b f r th l t t - r nd p nd nt v l t n h n r n r nt r t t d n E n S rv /95 t ll f th r t pr j t n n r ll f ll d n th f th pt - pr j t n r nfl n d b th n t n l nt r v n th r rd t r t r th h l th E t t f r n r pr pl nt n pl - r n th t r G pr j t n f r r r h h t t nt nt r t r t h rl r t r th br d th b nn n f 1995 b f r t rt d t d n- r d l pr nd t l r xt nt pr f tr d t n l rd dj t nt n f r t f nt rn t n l r th r h nd xp rt r n p rt nt r l n ff t d nd n h h r lt d n l r pr j t n f r xp rt nd nv t- p rt nl r n ll ff t d b th n r v n M r - nt n th r n n v r p r n f r th r t f r n v r bl n th ld nd n nt f r th r 19 -199 p bl h d v r f r n b r f n n l v r bl - th th n E n S rv 3/95 h r th r d r t d ff r n- x pt n f th pr j t n f r l pr n 199 - th r v - b t n th n t n l nt n v r n W th th n n th f r t h v b n v r n r nd f r l th n r rv t n h ll n th f ll n nt n th th n rt nt b d d n th d l h r lt n f r f th n r v n h n t nfl n d th f r rd th th xp r n f f r t f r 199 h r v - n h v l b n d r t f r th r r n - xt rn l f t r h v h d d v nfl n n th v r bl v n th h t r b ll- h p d l n d t f r t d r n th p r d On r l t d t th d n t th pr j t n f r nt rn t n l n d v l p nt
St t t r f r t f r 1995 Gr th r t n p r nt
ES1/94 1 ES5/94 ES3/9 ES /9 ES1/95 ES /95 ES3/95 ES /95 ES1/9
C n pt n n h h ld 7 9 7 9 3 1 7 nd n n-pr f t r n z t n 3 1 3 3 3 General government consumption 1 7 1 5 1 7 7 1 1 Gr f x d nv t nt
nl nd r 7 9 7 9 1 1 1 3 15 15 3 13 7 1 1
Exp rt 3 3 5 7 9 5 3 7
-tr d t n l d 5 1 3 5 7 7 9 5
I p rt 5 5 5 7 9 1 9 9 5 5 1
-tr d t n l d 9 5 7 9 3 9 7 7 9
G 7 5 3 7
M nl nd G 5 3 4.2 3 9 3 3
1 1 7 1 7 1 1 7 1 E pl d p r n Un pl nt r t (l v l 5 5 1 5 3 5 9 5 1 5 1 9 9
W p r n-h r 3 3 3 3 7 3 7 3 3 5 3 3 9
C n r pr 1 9 1 5 5 5
7 1 9 1 1 7 7 7 7 7 1 Exp rt pr tr d d 1 nth 3 9 5 5 5 5 3 5 3 5 3 5 E r r n r t (3 7 7 9 7 7 7 Av r l nd n r t (l v l 7 3 7 C rr nt b l n (b ll r 3 31 1 7 1 3 3 7 9 3 3 3
M M r t r th 5 5 9 7 3 7 7 5 9
Cr d l pr r 1 7 5 1 11 5 11 5 1 11 1 7 1 1 5 9
1 E n S rv n 1/9 r l n r n t n l nt f r f r 1995
Economic Survey 1/96 E n rv 1995
r r nd n l t d r n v r bl At f x d 199 pr ll n r
Un dj t d S n ll dj t d
199 1995 9 1 9 9 3 9 95 1 95 95 3 95
C n pt n n h h ld nd n n-pr f t r n z t n 33577 1 3959 1 7 9 1 5 1 13 1 597 1 91 1 9 3 1 91 7 Direct p r h br d b r d nt h h ld 1 9 17315 39 5 51 35 9 3 35 3 515 399 - r t p r h n r b n n-r d nt h h ld -15 9 -1 9 - -39 1 -3 -3 3 - -33 3 -339 -353 G n r l v rn nt n pt n 17 75 177 19 3 13 71 53 7
Gr f x d p t l f r t n 1 739 17 1 11 337 713 9 15 393 O l 511 9 9 13 13 15 33 1 17 1 1 575 1 3 1 9 1 7 7 Sh pp n 1919 3 1 7 73 - 7 59 1 -1 573 M nl nd r 11 3 13 5 7 7 91 1 3 7 1 3 9 3 7 3 33 53 M n f t r n nd n n 11 5 15 9 5 3 31 3 1 3 395 3991 399 r d t n f th r d 1 9 9 11 5 73 5 1 3 9 79 5 3 9 3 G n r l v rn nt 39 7 9 5 3 3 7119 911 719 ll n 3 55 9 53 5 1 55 1 3 7 Oth r rv 3 5 1 99 1 1 9 1 9 5 11 1 1 1 11 13 St 9917 3 13 5 7 33 9 75 1 9395 91 Gr p t l f r t n 1 7 591 1 9 35 7115 15 51 57 5 955 55519
n l d t f d nd rv 7 59 1731 19 7 197 3 1995 19 1 19 3 1 5 973 nd fr nl nd r 713 5 7 1 17 751 17 1 179 53 1 1 79 1 3579 1 515 1 33 1 5 7
Ex p rt 33 3 3 1 111 157 1 5 73 355 3 7551 r d t n l d 1 51 13 3 99 31 3 517 33 1 3 373 31 71 33 3 3 Cr d l nd n t r l 11 7 1 1 9 57 5 95 3 7 9939 9713 3 7 5 33 53 Sh p nd l pl tf r 1 9 11531 1 7 1993 3 1 9 3 1 3 1937 S rv 7 57 95 1 19533 193 19 75 1 3 1 1913
t l f d nd rv 111 11 175 733 3 7 1 95 559 5193 5 91 9 5
I p rt 7 35 3911 71 3 5 3 9 7 71 1 7 7 71 r d t n l d 1 5 19 5 33 3 1 7 5 91 97 5 5 Cr d l 97 1 1 3 3 3 3 1 39 3 1 3 Sh p nd l pl tf r 1 3 97 357 375 19 3 1 5 19 7 5 S rv 7 7 9 7 191 3 19735 19337 1 3 1 19 9 1 71 19 5
Gr d t pr d t n (G 193 77 5 59 1 3 7 1 1 17 3 157 1 3 7 9 3 7 M nl nd r 7 1 9 73119 17 1 175 17 913 1 133 1 357 1 9 1 1 37 1 1 3
O l t v t nd h pp n 13 1 51 3 3 539 33 97 35 99 35 9 35 37177 3 M nl nd nd tr 397 5 15 5 159531 1 17 3 1 9 1 3559 1 3 3 1 5 99 1 337 M n f t r n nd n n 97 17 1 5 359 5 5 11 53 9 5 7 9 9 5 17 r d t n f th r d 7 5 7 3 17759 179 5 1 5 1 1 19 3 19391 193 19 G n r l v rn nt 13179 133 9 3 1 3 7 33 9 331 331 1 33 3 335 33 7 r v t rv 33 3 171 33 55 5 31 595 53 599 7 97 7397 C rr t n t 1 7 311 15 1 77 1719 19 1 799 17 99 1 7 197
S " hn l nt "
1 E n rv 1995 Economic Survey 1/96
r r nd n l t d r n v r bl r nt v l h n n 199 -pr
Un dj t d S n ll dj t d"
199 1995 9 1 9 9 3 9 95 1 95 95 3 95
C n pt n n h h ld nd n n-pr f t r n z t n 7 1 1 7 - 1 - r t p r h br d b r d nt h h ld 5 1 9 - -9 7 13 3 3 9 - - r t p r h n r b n n-r d nt h h ld 13 3 -7 1 -3 -1 -11 1 -1 7 7 1 G n r l v rn nt n pt n 1 1 1 5 - 9 1 - 3 1 - 1 -1 1
Gr f x d p t l f r t n 5 5 5 1 -5 3 - 7 -3 5 1 -5 11 O l -7 -1 -1 17 1 - 1 -11 3 - 1 3 3 1 3 Sh pp n - 7 5 •• •• •• M nl nd r 1 1 1 -1 3 5 5 5 9 -1 5 - M n f t r n nd n n 5 3 7 - 9 3 1 3 7 11 9 9 1 r d t n f th r d - 9 3 - 1 5 - -7 5 1 G n r l v rn nt - -3 - 3 3 7 - 9 1 -7 3 ll n 5 9 1 -1 5 1 9 7 1 3 3 - - 1 - Oth r rv 1 17 - 1 7 5 5 - 1 -1 9 St 53 •• •• Gr p t l f r t n 9 9 -7 1 9 -3 9 7 3 -1 9 n l d t f d nd rv 9 3 9 - 1 1 - 3 3 1 9 nd fr nl nd r 1 1 9 9 1
Ex p rt 5 3 7 5 - 1 7 3 -1 -3 3 1 r d t n l d 13 3 5 3 7 9 1 5 1 -7 9 9 -1 Cr d l nd n t r l 11 3 1 - -5 3 1 1 - - 3 1 Sh p nd l pl tf r -11 5 9 -9 -7 75 7 - 9 5 - 9 1 S rv - 5 -1 - 9 -1 1 -5 1 1 7
t l f d nd rv 5 9 3 1 7 - 1 1 1 1 1 7
I p rt 1 1 5 1 - 3 1 3 -1 5 1 5 r d t n l d 15 9 3 1 9 5 7 - 3 3 1 7 Cr d l -17 31 3 - - 9 • -9 53 3 9 7 -1 1 - 1 Sh p nd l pl tf r -33 7 - 1 -1 -13 9 - 9 3 3 1 -3 - S rv - -3 5 1 3 1 -3 - -5 7 -5 1
Gr d t pr d t n (G 5 7 3 7 - 1 3 - 7 3 1 1 7 M nl nd r 3 3 - 1 1 1 - 5 3 1 5 1 3
O l t v t nd h pp n 1 3 3 1 -3 7 -1 - 5 3 9 M nl nd nd tr 5 3 5 1 9 1 9 1 1 M n f t r n nd n n 5 3 7 9 1 1 1 1 - 9 - 1 r d t n f th r d - 1 9 3 -1 3 -1 5 - 1 5 G n r l v rn nt 1 1 5 - 1 9 1 r v t rv 5 3 1 7 1 3 - 7 7 1 - 1 C rr t n t 5 7 -1 7 3 5 1 -1 7 3 7 1
S " hn l nt "
Economic Survey 1/96 E n rv 1995
r r nd f r l t d r n v r bl
r nt h n fr th Gr th fr pr v rt r p r d th pr v r n ll dj t d r nt
1995 95 1 95 95 3 95 95 1 95 95 3 95
C n pt n n h h ld nd n n-pr f t r n z t n 3 3 1 G n r l v rn nt n pt n 1 9 1 9 - 7 1 Gr f x d p t l f r t n 3 1 3 3 1 1 5 - 1 - nl nd r 1 1 1 1 5 7
n l d t f d nd rv 3 1 7 1 9 7 7 - d nd fr nl nd r 1 3 3 1 9 7 5 1
Exp rt 1 3 -1 1 - 5 1 - - - tr d t n l r h nd xp rt 7 1 11 1 3 5 7 -1 7 5 - 1
t l f d nd rv 1 9 3 3 3 9 1 1 - 1
I p rt 9 1 3 7 1 1 3 - 3 1 - 5 - tr d t n l r h nd p rt 7 9 1 7 3 - 5 1 1 -
Gr d t pr d t (G 1 1 - 3 - nl nd r 3 3 3 7 7 - 1 5
S " hn l nt "
hn l nt n th rt rl nt f r
St t t r rr ntl nd rt n n xt n v r v n f th n t n l nt v d f r f r th r 1 9 -1 99 r p bl h- d n St t t W l n 7 1995 ( xtr v d pr l n r n t n l nt f r f r th r 1993-199 ll f r f r th f r t nd nd rt r f 1995 r pr nt d n E n S rv n 3/95
Q rt rl l l t n : h l l t n r d n l d t l d l v l th n th l l t n f r th nn l n t n l nt nd r b d n r pl f d pr d r
r nd l n n th d t : In th rt rl n t n l nt ll v l r r rr ntl l l t d t n t nt 199 pr n ht fr th t r h h f b r nfl n th n t nt-pr f r nd th th nn l r t f h n n v l ( r th r t r th f p r n ll t bl pr nt r th r t th 199 th b r ( n r f r l l t n h d n b r l l t n n t nt-pr f r f r th r pr r t 199 t 199 pr h r l l t n f pr rr d t t th t r l l v l f th rt rl n t n l nt
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h n ll dj t d t f r r l l t d th d ff r n b t n t t l ppl n th n d nd th f n pt n xp rt nd r f x d p t l f r t n n th th r
3 E n rv 1995 Economic Survey 1/96
E n p l l nd r 1995
n r built at Kværner MasaYards in Finland (see also 6 Decem- 1. Sweden, Finland and Austria accede to the EU. ber 1994).
2. The Norwegian power supply producer Mascot Electro- 17. The cooperative movement in Norway celebrates the nic A/S receives orders worth more than NKr 500 million 150th anniversary of the world's first cooperative. The from various mobile telephone producers. 100th anniversary of the establishment of the cooperative movement's international organization is also celebrated. 3. The Army's new tanks are supplied with gun turrets The cooperative movement in Norway has an annual turn- from Kværner Eureka. The contract is worth about NKr over of close to NKr 100 billion and about 1.3 million 500 million. Hagglunds Vehicle AB won the contract with members. the Defence last year on the condition that they purchase goods and services in Norway. 20. The Federation of Norwegian Professional Associa- tions (AF) becomes a member of the Nordic Professional 4. EFTA's surveillance body ESA deals with the Norwe- Associations Union (NFS). It is AF's cooperation agree- gian retail monopoly for wine and spirits. The surveillance ment with the Norwegian Federation of Trade Unions that body declares unequivocally that the retail monopoly is a has paved the way for the agreement. NFS has eight mil- violation of the EEA Agreement's prohibition of quantita- lion members in the Nordic countries. tive trade restrictions and provisions on monopolies. ESA has previously declared that it will abolish the State Wine 25. The Gas Negotiations Committee, Total and the French Monopoly's exclusive rights on imports, exports and monopoly importer Gaz de France sign a new and compre- wholesale sales. hensive agreement concerning the sale of Norwegian natu- ral gas to France. The agreement will run for 26 years and 7. An out-of-court settlement is reached between Hambros relates to a total of 40 million toe natural gas. Deliveries Bank and the Norwegian state in connection with the Rek- will start in the year 2001 and reach a plateau of 2 million sten case. The settlement between Hambros Bank and the toe a year in 2005. The agreement has a gross value at Norwegian Guarantee Institute for Ships and Drilling delivery of about $ 4.5 billion. Vessels (GI) ensures that the state will receive NKr 300 million and will mark the conclusion of the search for 26. The Government suffers two defeats in the Storting. Reksten's hidden fortune abroad. Minister of Finance Sigbjørn Johnsen must acknowledge that the tightening of the splitincome tax model will be re- 10. Sweden's Minister of Finance Gøran Persson presents jected. Instead the majority in the Finance Committee want a government budget in which SKr 21.7 billion is to be accept for a differentiated personal income ceiling. In addi- saved over the next 18 months. The goal is to reduce tion, the draft bill for a new Companies Act was returned central government debt to less than 60 per cent of GDP, to Minister of Justice Grethe Faremo with a request to compared with close to 100 per cent today. draw up a separate companies act for small companies.
13.Freia AS hands over the responsibility for the distribu- 27. The Government gives its approval to the development tion of chocolate products to the large food chains' own plan for a new gas pipeline from the Troll terminal, the so- wholesalers. Initially, 114 Freia employees will be dismis- called Zeepipe Phase IIb. Total investments come to NKr sed. 3.3 billion. The pipeline will extend from the riser plat- form 16/11E in the North Sea to Kollsnes. 14.Telenor Mobil awards the contract for expanding the GSM network in Norway to the Swedish company 31. Norsk Helikopter is awarded a contract worth NKr 500 Ericsson. The framework agreement is worth about NKr million for helicopter transport from Sola to the Ekofisk 500 million and will run for three years. area. The contract will run for a fiveyear period.
14. Aker Offshore Partner and Kværner Installasjon in Sta- br r vanger are awarded contracts worth altogether NKr 2.3 bil- lion by Statoil. The agreement will run for five years and 1.The Post Office records a surplus of NKr 466 million relates to maintenance and smaller modifications to the after the accounts for 1994 are finalized. Total revenues Statfjord and Gullfaks platforms. amounted to NKr 10.1 billion, while expenditure was NKr 9.6 billion. 17. Kværner wins a contract worth NKr 5 billion to build three new cruise ships. The ships, which have been orde- 2. Remøy Holding is awarded the largest supply ship con- red by the US company Carnival Cruise Lines, shall be tract in the North Sea, worth about NKr 400 million. Acc- ording to the contract, Statoil will lease a new supply ship
24 Economic Survey 1/96 Economic survey 1995
for NKr 150 million for twelve years, with the possibility for 80 per cent of the deliveries and AS Biomar the remain- of an extension for a further six years. der.
2. The European Commission approves additional state 13. Oil production on the Statfjord field passes 3 billion support for the Kværnerowned Warnov yard in Germany. barrels, entailing that the field has produced oil worth The Commission gives its consent to investment support more than NKr 500 billion since 1979. amounting to altogether DM 202.5 million, or a little less than NKr 1 billion. 14. SAS orders 35 Boeing 737 aircraft, model 600, worth SKr 8.5 billion. Options for another 35 planes, which can 3. Minister of Industry and Energy Jens Stoltenberg an- be converted to larger aircraft, come in addition. The first nounces 56 blocks on the continental shelf, 16 in the North aircraft will be delivered at the end of 1999, and thereafter Sea and 40 further north in the Norwegian Sea, as part of on a regular basis up to 2002. the 15th round of licensing. 15. Norsk Hydro, which is operator for the Njord field, 7. The Environmental and Energy Committee gives its con- signs a letter of intention with Aker Stord AS concerning sent to the development and operation of the Norne field. an EPC contract (engineering, procurement and construc- tion) for a floating steel platform. The contract, worth 13. The Government decides to relinquish the import mo- about NKr 2.8 billion, entails that the platform shall be nopoly for wine and spirits. It is hoped that this decision ready to be towed out from Aker Stord by 30 June 1997. will save the retail monopoly from attacks by the EFTA Court. 15. The Norwegian Federation of Trade Unions (LO) breaks off negotiations with the Norwegian Confederation 14. Den norske Bank announces its highest profits ever. of Business and Industry (NHO). The wage settlement for The profit for 1994 was NKr 2.68 billion, compared with 250 000 employees in the private sector must therefore be NKr 0.94 billion the previous year. settled through mediation. The negotiations were broken off due to dissatisfaction with the pay increase and arrange- 16. Statoil presents its best results ever. The aftertax profit ments offered by the employers. came to NKr 5.4 billion for 1994, against NKr 3.4 billion in 1993. The company will pay NKr 11.5 billion in taxes 16.Tofte Industrier AS sells its ultra-modern chlorine fac- and NKr 1.6 billion in dividends to the state. tory to India, where it will produce environmentally toxic agro-chemicals. The plant, located in Hurum, had to close 20. Norsk Hydro announces an operating profit of NKr in 1991 due to protests from both the authorities and envi- 7.27 billion and a net profit of NKr 4.04 billion for 1994, ronmental organizations. an increase of NKr 3.23 and 1.04 billion from 1993. 17. Kværner's Swedish subsidiary Kværner Enviro Power 23. By revitalizing its German subsidiary, Saga Petroleum is to supply a complete waste recovery plant to Thailand. enters into an agreement with the gas distributor company The plant will cost about NKr 375 million. Wingas. The agreement relates to a 15year lease of trans- port and storage capacity for gas as well as the resale of 21. The Australian mining company Broken Hill takes gas to Wingas. Saga has applied to the Gas Negotiations over parts of the ilmenite smelter in Tyssedal. NKr 200 Committee for the purchase of the gas, which represents a million will be invested in the smelter. In the future the value of about NKr 1 billion a year. The background for smelter will use raw materials from Australia and no lon- the agreement is the rejection on several earlier occasions ger purchase raw materials from Titania in Dalane. of Wingas' applications to purchase Norwegian natural gas. 22. The insurance group which insured the Sleipner plat- 24. Aker and Kværner have each been awarded a contract form, led by Vesta, brings an action against Norwegian by Statoil. Aker shall be responsible for assembly and Contractors (NC) and the parent company Aker. They de- hookup on the Norne field, while Kværner will handle the mand the repayment of NKr 2.3 billion of the insurance hookup work on the Sleipner T platform. The contracts for paid. This is the largest recourse claim ever raised in Nor- Aker and Kværner are worth NKr 460 and 315 million, way. The Sleipner platform sank in the Gansfjord in 1991. respectively. 22. The Norwegian-Swedish working partnership AF MNFP is awarded a contract by NSB Gardermobanen A/S worth about NKr 1.8 billion. The company will be respon- M r h sible for site preparations for the stretch between Åråsen 13. T. Skretting and AS Biomar are awarded a contract, and Leirsundveien in connection with the new railway worth about NKr 500 million, to supply feed to the fish far- extension. ming companies Frøya Holding AS and Mowi AS. After having negotiated individually, the two buyers decided to 27. On behalf of its 22 Norwegian electricity producers, cooperate on the contract. T. Skretting will be responsible Euro-Kraft Norge AS concludes a power exchange con- tract with Germany's largest electricity producer Euro-
25 Economic survey 1995 Economic Survey 1/96
Strom. The contract will result in investments worth about 7. Statoil invests about NKr 1 billion in Malaysia. The NKr 4 billion in new power cables from Norway to Germa- company wants to strengthen its trading position in South- ny. The contract involves reciprocal supplies for 25 years east Asia and buys a 15 per cent stake in the expansion of starting on 1 January 2003 at the latest. the Melaka refinery.
30. Statoil doubles its reserves estimates for the Smørbukk 20. Kværner Pulping is awarded contracts worth altogether field, i.e. an increase of abut 290 million barrels. For the NKr 190 million by the Brazilian group Votorantim. The owners, this will boost sales revenues by NKr 32 billion. contract covers equipment in connection with Votor- antim's plans to modernize its pulp and paper factories. 31. Norske Skog buys out its partner in a French paper mill, expands the chipboard factory in Braskereidfoss and 21. The employee organisations in the state present their acquires the chipboard competitor Agnes Fabrikker. Alto- demands in connection with the central government settle- gether, the investments, purchases and takeover of loans ment. Common to all the demands are higher purchasing come to NKr 840 million. power and measures to achieve equal pay.
24. Norway and the European Commission reach agree- Apr l ment on new duty-free quotas for Norwegian fish exports 3. Orkla buys Procordia from Volvo for nearly NKr 3.7 bil- to the EU. The agreement takes account of new member lion. Orkla thus becomes the largest food and beverage countries in the EU, and Norway's duty-free quota increa- company in the Nordic area, with 21 000 employees and ses by the average of exports to these countries in the pe- turnover of NKr 26 billion. riod 1992 to 1994.
3. Transocean and Wilrig merge and become the world's 25. Westamarin AS is awarded a contract, worth NKr 1.4 third largest rig company. The new company is expected to billion, for building Stena Line's four new catamarans. have sales of NKr 3.5 billion this year. 25. The heads of the two farmers' unions present their de- 3. Transocean Petroleum Technology signs a contract with mands in connection with the agricultural settlement. The Saga Petroleum for drilling services and maintenance of demands entail a price decline for farmers of NKr 195 mil- the drilling module Snorre 'TLP. The contract, worth lion as well as zero growth in support over the government NKr 310 million, will extend over a period of four years. budget.
4. The Confederation of Norwegian Business and Industry 25. Municipal employees' representatives present their pay and the Norwegian Federation of Trade Unions reach demands. The municipal sector in LO's negotiating group agreement on this year's wage settlement (see 15 March). (LOK) demands an additional NKr 5 700 for those earning According to the agreement, average hourly wages will be less than NKr 146 700, and an additional NKr 4 500 for increased by 80 øre, with an additional 85 øre for those those with earnings above this level (pay grade 11). In ad- who do not have local negotiating rights. Those earning dition, LOK wants to have extra increases in pay grades 1 less than 90 per cent of the average will receive an extra 80 to 5. The Federation of Norwegian Professional Associa- Ore, or altogether NKr 1.60. tions in the municipal sector demands that all its members be moved up a pay grade and that additional pay increases 5. The National Insurance Institution shelves plan to of 0.5 per cent be granted to those with pay exceeding switch to the new computer system Tress 90 after having NKr 309 800 (pay grade 51). The Confederation of Voca- spent more than NKr 600 million. The change-over to the tional Unions in the municipal sector demands a flat nomi- new system originally had a price of NKr 1.3 billion. The nal increase of NKr 5 500 a year for all its members. National Insurance Institution will continue to use its cur- rent nine-year old system. The Norwegian Federation of State Employees' Unions in LO and the Norwegian Union of Teachers demand increa- 5. Alcatel Telettra Norway is awarded a framework con- ses of NKr 5 700 for those in pay grades 1 to 11, and tract worth NKr 500 million by British Telecom. The com- NKr 4 500 for those in pay grades 12 to 75, with effect pany will supply fibre optic cable systems to the British from 1 May. The organizations also demand a centralised high-frequency network for speech and data. equal pay fund of 1.1 per cent of total annual pay. State employees in the Confederation of Vocational Unions de- 5. Sweden's Minister of Finance, Göran Persson, presents mand an equal nominal amount of NKr 5 500 a year for all a new austerity package to reassure the money market. members with effect from 1 May. They also demand a cen- This includes proposals to reduce sickness, maternity and tralized adjustment settlement focused on measures and unemployment benefits to 75 per cent of the current level low-paid employee groups in which women make up the and a reduction in the VAT rate for food from 21 per cent greater part. With regard to the question of equal pay, both to 12 per cent. the Confederation of Vocational Unions and Federation of Norwegian Professional Associations want to have funds allocated for local negotiations.
26
Economic Survey 1/96 Economic survey 1995
28. Saga Petroleum is quoted on the New York Stock Ex- change in management is necessary to solve the enormous change for the first time. financial problems of the company.
24. The Ullstein Group is awarded a ship contract worth M NKr 220 million. The contract was concluded with the 6. The Norwegian Defence concludes a contract with Hug- state of South Korea, and relates to a seismic research hes to buy missiles worth about NKr 4.5 billion. The agree- vessel. South Korea is the world's second largest shipyard ment requires Hughes to buy products from Norwegian in- nation. dustry. The missiles are to be used in the F-16 aircraft. 30. Wilrig is awarded a contract by the Brazilian oil com- 10. Conoco Norway babtizes the Heidrun platform. The pany Petrobas for drilling deep-sea wells on the Brazilian platform is the first concrete tension leg platform in the continental shelf. The contract is worth about NKr 360 mil- world and one of Norway's biggest industrial investment lion. amounting to more than NKr 25 billion. Oil production from Heidrun will start in August, and will give the central 31. The Federation of Norwegian Professional Associa- government tax and royalty revenues of around NKr 7 bil- tions, the Norwegian Police Federation and the Norwegian lion annually from the year 2000. Union of Teachers select some of their members for strike action. Among the strikers are physicians, police officers 10. The Revised National Budget for 1995 is presented. and nursery school teachers. Minister of Finance Sigbjørn Johnsen reduces the govern- ment budget deficit to NKr 6 billion. In 1996, a surplus of NKr 10 billion will be allocated to the Government Petro- n leum Fund. 1. Floods in the eastern part of Norway destroy buildings, roads and cultivated fields. 10. Norway's largest gas customer, the German distributor Ruhrgas, has sent an enquiry to the Gas Negotiations Com- 1. Norsk Hydro and Kværner Masa Yards sign a letter of mittee (GNC) concerning the purchase of an additional intention concerning the development of a floating storage two billion cubic metres of gas a year. At the end of April unit on the Njord field. The contract is worth NKr 470 mil- the GNC rejected an application from Saga to purchase lion. Norwegian gas which was to be resold to Ruhrgas' compe- titor Wingas. The enquiry from Ruhrgas represents gas 1. Norske Skog invests NKr 370 million in Folium Fabrik- worth NKr 1.3 billion a year, twice the amount Saga wan- ker in Hønefoss to develop two new high-quality types of ted to sell to Wingas. paper.
11 SAS and Lufthansa conclude a cooperation agreement 3. The Government decides to introduce compulsory arbi- in which the main component will be a coordination of the tration for the police. airlines' scheduled service network throughout the world. The cooperation agreement will come into force on 1 Ja- 6. After the Federation of Norwegian Professional Associa- nuary 1996 provided it is approved by the EU Commission. tions announces plans for an escalation of the strike, by inc- luding air controllers and the weather forecasting service, 12. The central government and farmers' organisations the Government decides to introduce compulsory arbitra- concludes a new agricultural agreement which entails that tion. The Norwegian Union of Teachers has decided that support to farmers will be reduced by NKr 900 million. Of the strike among nursery school teachers shall be escalated. this amount, reduced transfers over the government budget will account for NKr 380 million and reduced prices to far- 12. The Storting approves the EU's oil directive, entailing mers for agricultural products for NKr 520 million. This that the EEA Agreement shall also apply to the Norwegian will result in cheaper meat, cheese and milk for consumers. continental shelf.
17. After being towed for a week, the Troll platform rea- 13. Borregaard in Sarpsborg opens a purification and ches the field where it will remain for the next 70 years. biocombustion plant which has cost NKr 200 million to The field is Europe's largest offshore gas field with about build. The plant is a result of considerable reductions in 1 300 billion cubic metres of recoverable gas reserves. The licenses for emissions from process plants in Sarpsborg. Troll platform is the world's largest concrete platform, and the first platform secured to the seabed at a depth of 300 20. Dyno Industrier is selected as sole supplier of oil metres. The total cost of Troll phase 1 is expected to be chemicals for Norsk Hydro's activities on the continental about NKr 30 billion. shelf. The deliveries will extend over a five-year period and are worth about NKr 150 million. 22. The managing director of the Norwegian State Rail- ways (NSB), Kristian Rambjørg, resigns from his position 20. Petroleum Geo-Services (PGS) signs a contract giving with immediate effect. The Board of NSB feels that a them sole rights to engage in seismic surveys of the seabed
27 E n rv 1995 Economic Survey 1/96
off China. The contract, worth several hundred million 10. The oil company BP awards Scandinavian Service kroner, has a duration of five years. Partner & Industrial Catering a five-year catering contract for the Ula and Gyda fields. The contract is worth NKr 220 21. The oil company Shell decides to halt plans for dum- million. ping the oil rig "Brent Star" in the North Atlantic due to extensive international protests. 10. Kongsberg Offshore AS signs a contract for supplying technological equipment to the Brazilian state oil company 30. The company Advanced Production & Loading from Petrobras. The contract, worth NKr 100 million, relates to Arendal is awarded a contract worth NKr 120 million from supplies of newly developed equipment that is used to con- Norsk Hydro. The contract relates to the company's floa- trol oil production at great depths. ting production solution for the Njord field. 11. The company Hydro Agri International, which is owned by Norsk Hydro, concludes a contract with the l Japanese yard Hitachi Zosen for building two new gas 1. Norway concludes an agreement with the EU concern- tankers. The contract is worth about $ 80 million, or about ing trade in processed agricultural goods. The agreement NKr 500 million. ensures duty-free import and export quotas between Norway and the EU. The quotas are based on average im- 18. Following strong pressure from the Gas Negotiations ports and exports for each type of product between Committee (Norsk Hydro and Statoil), Saga Petroleum Norway and Sweden, Finland and Austria in the period abandons its attempt to sell gas to Germany's Wingas, 1991-1993. thereby eliminating future gas earnings of NKr 15 billion in addition to strategic stakes in the German gas network. 6. Statistics Norway presents revised national accounts The Gas Negotiations Committee justifies its position on figures for the period 1988-1992. the grounds that it would be detrimental to sell gas to the main competitor of Ruhrgas, Norway's largest gas custo- 10. Soviknes Verft in Haram concludes an agreement to mer. build a shrimp trawler for the Danish company Ocean Prawn. The contract is worth NKr 100 million. 22. The AF Group is awarded a contract for site prepara- tions for the Gardermoen railway. The contract is worth 13. Norsk Hydro approves the expansion of the smelter in NKr 176 million, with most being awarded by NSB Årdal, costing NKr 1.7 billion. In addition, Norsk Hydro Gardermobanen AS. will use a few hundred million kroner to modernize the power station. 22. Borregaard invests NKr 190 million in Borregaard ChemCell in order to be able to offer high-quality chemi- 15. Fosen Mekaniske Verksted (FMV) signs a contract, cal pulp. worth about NKr 1 billion, with the Finnish shipowners United Shipping LTDAB and Birka Line AB to supply 26. Saga Petroleum upgrades recoverable reserves on the four ro-ro ships. Snorre field by 57 million barrels of oil, to a gross sales value of nearly NKr 6 billion. 17. Helikopter Service AS is awarded a contract to deve- lop helicopter services for the Hibernia oil field in Canada. 29. Kongsberg Offshore is awarded a contract worth be- The contract is worth about NKr 250 million. tween NKr 2.5 and 3 billion from Statoil. The contract relates to supplies of all facilities for Statoil's subsea pro- 29. Tandberg Data is awardal a two-year contract, worth duction the next five years, and is the largest of its kind about NKr 125 million, with the US company Sun Micro- ever concluded. Norwegian sub-contractors can expect to system. Sun Microsystem is the world's largest supplier of receive orders for about half of the contract amount, UNIX workstations, and the contract relates to Tandberg's amounting to between 1000 and 1500 man-years. cartridge-based storage technology QIC (Quarter Inch Car- tridge). 31. Kværner Rosenberg in Stavanger is to convert an earlier oil platform to the world's first launching pad for booster rockets. The project has been given the name "Sea A t Launch" and is a joint venture between the Kværner 10. This is the 300th anniversary of the issuance of the first Group, Boeing (US), NPO Yuzhnoye (Ukraine) and RSC officially approved currency notes in Denmark-Norway. It Energia (Russia). The conversion will cost about NKr 500 was King Christian V who gave merchant JOrgen Thor million and employ between 400 and 500 people at Rosen- MOhlen in Bergen permission to issue the notes, the so- berg for 12 to 14 months. The rockets shall launch com- called Widen notes. The notes were dated 10 August mercial satellites, primarily telecommunications satellites. 1695 and were put into circulation immediately.
28 Economic Survey 1/96 Economic survey 1995
Kværner will also supply a ro-ro ship that shall function as 22. Larsen Oil & Gas in Bergen is awarded a drilling and a supply ship and control centre for satellite launches. This test production contract worth NKr 140 million on the Bri- order is worth about NKr 600 million. tish continental shelf.
31. Helikopter Service's subsidiaries, Bond Helicopter in 29. Following extensive leaks, Minister of Finance the UK, and Lloyds Helicopter in Australia are awarded Sigbjørn Johnsen presents proposals for the National Budget contracts worth altogether NKr 250 million. for 1996. The budget shows a surplus of NKr 10.6 billion.
31. Norsk Forsvarsteknologi (NFT) concludes an agree- ment with the US defence companies GM Hughes Aero- O t b r space and Raython Company. The agreement relates to the 4. Norway Seafood/RGI sign a contract, worth at least sale of medium-range missiles where NFT has developed NKr 1.4 billion, to build 16 fishing vessels for Russian and produced the fire control system. The market is estima- shipowners. The vessels, to be built at Brattvåg shipyard, ted at NKr 30 billion over the next ten years. NFT's share will fish on Russian quotas. is estimated at NKr 3 billion. 5. Alcatel Kabel Norge signs a contract worth NKr 270 million with Telenor concerning supplies of cables. S pt b r 1. Aker Verdal is awarded a contract worth about Nkr 500 7. Brattvåg shipyard signs a contract to build five vessels million by Phillips Petroleum in connection with the deve- for a Russian shipping company which engages in fishing lopment of Ekofisk II. on the Pacific coast. The contract is worth NKr 508 mil-
8. The oil company Conoco must pay Aker's subsidiary Norwegian Contractors NKr 330 million as compensation 17. Statoil enters the battle for the Irish oil company Aran for cost increases in connection with the work on the Hei- with a bid of NKr 2 billion. drun platform. Initially, Aker demanded between NKr 500 and 800 million. 18. Kværner Pulping AB is awarded a contract worth about SKr 185 million by Stora Cell in Sweden. 9. The US manufacturer of automotive parts A-CMI estab- lishes a factory in Lista. The plant, which entails invest- 19. Eeg-Henriksen Anlegg wins a contract for NKr 268 ments of NKr 260 million, will provide 250 new jobs. million for building 13 kilometres of the trunk road tunnel Elkem Aluminium will be co-owner and sub-contractor. between Aurland and Lærdal.
18. Oceanor signs a three-year contract worth about 23. Langsten Slip & Båtbyggeri in Romsdal will build a NKr 100 million with BPPT, the central directorate for factory trawler for Norway Seafood AS. The contract is technology and industrial development in Indonesia. The worth NKr 400 million. The hull will be built at Tangen project involves the establishment of a maritime environ- Verft in Kragerø. mental monitoring system, Seawatch. 24. Esso Norge signs an agreement with Smedvig for the 19. Statoil signs an agreement with Conoco concerning the purchase of a special vessel SPU 380 for NKr 1.82 billion acquisition of 257 petrol stations in Ireland. The agreement in connection with the proposed development of the costs Statoil about NKr 500 million and will come into ef- Balder field. fect at the beginning of 1996. 24. Norsk Hydro concludes a long-term contract for dril- 20. The European Commission gives its approval to a joint ling production wells for Hydro-operated fields with venture between the food divisions of Orkla and Volvo on Odfjell Drilling and Consulting Company. The contract is the condition that Orkla sells Hansa Brewery in Bergen so expected to be worth about NKr 700 million. that the new company will not be too dominant in the Nor- wegian beer market. 31. Raufoss Technology is awarded two major contracts. One is for Canada and relates to sales of M72 for NKr 150 21. Statoil awards Aker a supplementary order for more million. The other is a development contract, worth about than NKr 130 million. The order with Aker Offshore Part- NKr 75 million, for 30 mm ammunition for the Norwegian ner relates to projects in connection with the gas pipeline Army. Norfra.
22. Selmer is awarded a contract worth NKr 221 million v b r by Oslo Hovedflyplass, the company responsible for the 1. PLM Moss Glassverk AS is the first company that is de- new airport at Gardermoen. Selmer will be the main con- nied state aid as a result of the EEA Agreement. The Swe- tractor for the airport's external facades, sun screening and dish management evaluates closing the company after EF- security entry systems.
29 E n rv 1995 Economic Survey 1/96
TA's surveillance body ESA refuses to grant an exemption 17. The Storting adopts a new Securities Trading Act from the basic tax on beverage containers. which will come into force on 1 January 1996. The new Act entails changes in capital adequacy rules for securities 1.A political majority in the Storting advocate a privatiza- firms and rules on short sales. tion of Ofotbanen. The Norwegian State Railways and Swedish State Railways will each own 24.5 per cent of the 17. Russia, which took over the foreign loans of the former shares in the new company, Malmtrafikk AS. The remain- Soviet Union, signs an agreement with creditors after four ing 51 per cent of the shares is owned by the Swedish com- years of negotiations concerning debt repayments. pany LKAB. 18. Haugesund Mekaniske Verksted signs a contract with 2. Veidekke AS concludes a contract, worth about Norsk Hydro on the construction of the Visund platform. NKr 210 million, for the construction of Amanda Storsen- The contract is worth NKr 3.1 billion. ter in Haugesund. 19. Torstein Moland resigns from his post as central bank 2. Alcatel Telecom Norway wins two contracts, worth alto- governor after being given a penalty tax by the Oslo Tax gether NKr 185 million, with the Norwegian Defence. One Board due to gross negligence in the so-called Airbus case. contract involves the defence's digital network while the Moland has appealed the decision to the Superior Tax other relates to a communications control system for the Assessment Board. Air Force. 21. The presidents of Bosnia, Croatia and Serbia sign an 2. The Russian and Norwegian authorities, through Eks- extensive peace agreement which may entail the end of a portfmans and the Russian foreign bank Vnjesekonom- war that has lasted for nearly four years. bank, sign an agreement on financing exports of capital goods and ships to Russia. The agreement paves the way 21. The Norwegian Competition Authority does not give for building Russian fishing vessels at Norwegian shipyards. its approval to the book agreement which regulates the sale of Norwegian books. The Competition Authority demands. 3. The Ugland Group signs an important contract concer- that the sale of school books and textbooks be exempt ning the transport of oil from the Hibernian oil field off the from the agreement. coast of Canada. The contract entails that Ugland and its Canadian partner will build a tanker reinforced against ice 21. The Storting decides to extend Norsk Hydro's electri- at Samsung in South Korea for NKr 750 million. city agreement for the aluminium plant in Årdal.
3. Carnival Cruise injects USD 50 million in Kloster Cruise, 22. As expected, OPEC's ministerial council decides to ex- increasing its ownership to two thirds of the company. The tend the current production quota of 24.52 million b/d into capital injection saves Kloster from bankruptcy. 1996.
4. The Norwegian State Railways (NSB) is given authori- 23. Negotiations break down between the Norwegian zation to sell assets to free up capital. NSB will sell shares Fishermen's Union and the state concerning a new in Narvesen for NKr 500 million in addition to properties fisheries agreement for 1996. worth NKr 300 million. The funds will be reinvested in new equipment. 24. Along with NCC, Eeg-Henriksen is awarded a contract worth NKr 510 million for internal construction and the ter- 4. Veidekke signs a contract worth NKr 170 million in con- minal building at Gardermoen airport. Including related nection with the construction'of Norsk Bransjesenter at contracts, the project is worth about NKr 1.1 billion. Skøyen in Oslo. 30. Odfjell Drilling signs a letter of intent for a three-year 8. Norsk Hydro wins a contract worth about NKr 200 mil- contract with Statoil for upgrading an older drilling rig. lion for the sale of Norwegian-produced fertilizer to China. The contract is worth a good NKr 500 million. Solberg & Andersen sign a contract worth about NKr 170 million for supplies and training in connection with five drinking water plants. b r 1. The Government presents the Final Budget Bill. In spite 10. The Government decides to extend shipyard support of the NKr 3.5 billion increase in expenditure after the pre- for several hundred million kroner into 1996 as a result of sentation of the National Budget, the surplus and transfers the failure to reach agreement on the OECD accord which to the Petroleum Fund rise from NKr 10.6 billion to would abolish shipyard support from 1 January. NKr 12.6 billion.
15. The Ullstein Group is awarded a contract worth . 1. Spain's Foreign Minister Javier Solana is appointed new NKr 290 million from the Swiss shipping company Care Secretary General of NATO. Offshore for building a combined offshore vessel.
30 Economic Survey 1/96 E n rv 1995
3. Minister of Fisheries Jan Henry T. Olsen orders a halt in bumper systems and other body components to Volvo Per- all feeding of salmon over two kilos to prevent further sur- sonvagnar AB. A condition for the contract is that Raufoss plus production. The ban will apply until 15 January 1996. invests NKr 250 million in a new component plant in Gothenburgh. 5. Moen Slip in North Trøndelag signs a contract with In- dependent Fisheries Ltd. in New Zealand for the construc- 23. Nocon AS, the export company for construction in Vei- tion of a stern trawler. The contract is worth NKr 70 mil- dekke and Selmer, is awarded a contract for building tun- lion and safeguards 60 jobs through 1996. nels in Italy worth NKr 150 million.
7. The state sells just under 100 million shares in Christia- nia Bank, at a loss of NKr 1.1 billion. The state still owns n r 199 51 per cent of the shares in the bank. 9. Dyno is awarded a contract, worth NKr 116 million, by Saga Petroleum. The contract relates to supplies of produc- 7. Kværner Pulping Inc. in the US is awarded a contract tion chemicals for the Snorre and Vigdis fields. worth about NKr 160 million by one of North America's largest pulp and paper manufacturers. The contract, which 17. Kværner pulping wins a contract, worth NKr 440 mil- • relates to supplies of a Chemrec Recovery Booster with an lion, for modernizing a chemical pulp plant in Monte accompanying system, represents a commercial breakthro- Alegre. ugh for this technology developed and patented by Kvær- ner. 22. Allocations in the 15th round of licences on the Norwe- gian continental shelf are announced by the Ministry of In- 9. Skibsaksjeselskapet Storli in Bergen orders two new che- dustry and Energy. The Norwegian operator companies mical tankers for delivery in 1998 from Kværner Statoil, Norsk Hydro and Saga Petroleum receive an offer The ships have a total price of $ 150 million. The shipping for operator responsibility of 8 out of a total 18. The company has an option for the delivery of an additional French company Elf and the US company Conoco, whose two ships in 1999. cost overruns have previously entailed that the state has lost NKr 5 billion, were not allotted operator responsibility 14. Statoil acquires the Irish oil company Aran Energy. Sta- and are thus without new assignments in Norway. The oil toil is willing to pay more than NKr 2 billion for the com- companies have a one-week deadline to accept the offers. pany, which has 40 employees and turnover amounting to almost NKr 1 billion in 1995. 22. The Board of the Post Office considers a report which concludes that the post office network must be substantial- 16. Haugesund Mekaniske Verksted signs a letter of intent ly reduced. The reorganization will require a reduction of with Kværner Rosenberg AS on the construction of a steel 3 500 man-years and a closure of 900 post offices by 1999. jacket for the Visund platform. The contract is worth about NKr 300 million. 23. The Government authorizes both Den norske Bank and the Dutch company Aegon to buy the insurance company 16. Minister of Industry and Energy Jens Stoltenberg pre- Vital. In practice, this means the DnB will buy Vital since sents plans for the development of the Asgard field on Hal- 99 per cent of the shareholders in Vital want DnB as ow- tenbanken. The development will cost NKr 27 billion. ners. DnB, which already has a 10 per cent stake in Vital, will have to pay NKr 2.8 billion for the remainder of the 16. The Storting's Finance Committee presents its report company. on next year's government budget. The Government has a majority against it on budget items amounting to about 25. The Storting gives the Norwegian State Railways NKr 300 million, in addition to changes of about NKr 2.5 (NSB) permission to sell its shares in Narvesen. NSB to- billion that were made in the Government's programme day owns 41 per cent of the shares in Narvesen. last autumn. 26. Raufoss AS invests NKr 250 million in a production 16. In connection with the development of the Njord field, plant for plastic moulding, lacquering and assembling bum- Norsk Hydro awards two contracts, worth NKr 365 mil- per systems in Gothenburgh (see 22 December 1995). lion, to Coflexip Stena Offshore Norge AS. Volvo stipulated as a condition that Raufoss had to move its production to a location close to Volvo's plant in 22. ABB is awarded a contract worth NKr 650 million for Gothenburgh when the long-term supply contract was the subsea system of Esso's Balder field in the North Sea. igned. Between 170 and 200 jobs at Raufoss will be affec- ABB will supply the entire system for subsea production. ted by the move. In addition, the contract contains an option for an additio- nal 11 wells with a value of about NKr 500 million. 26. The licensees on the Varg field, Saga Petroleum and Statoil, decide that the field will be developed, pending the 22. Raufoss Automotive (RAA) is awarded a contract by authorities' approval. Three main contracts are awarded in Volvo worth more than NKr 2 billion. RAA will supply this connection. Far East Livingston Shipbuilding will sup-
31 E n rv 1995 Economic Survey 1196
ply production ships (contract worth about NKr 1.5 bil- lion), Aker Verdal, in cooperation with Saipem UK, will supply the installed wellhead platform (contract worth about NKr 250 million) and Coflexip Stena Offshore Norge will supply field cables and risers (contract worth about NKr 130 million).
29. All oil companies that were offered operator responsibi- lity in the 15th round of licences accept the offer.
br r Statnett decides that it will invest NKr 120 million in new power lines and transformer stations in Hadeland and in Ringerike.
5. The Government approves Esso Norge's plan for deve- loping and operating the Balder field 180 kilometres west of Stavanger. Development costs are estimated at a little less than NKr 5 billion. Balder is identical to the first licence that was awarded in Norway in 1965, but it is only recently that sufficiently advanced technology has been developed to make it profitable to develop the Balder field. Recoverable reserves in the field are estimated at 170 mil- lion barrels of oil. Economic Survey 1/96 A r n G - n d t?
A r n G n d tr
Kn t . Alf n
h r d t pr d t (G , n th f r n h h t r l rl p bl h d nd d t v l t p l pr p l , pt b th t v f l pr n f r n ll b n nd f l b f r d d n h h n p nd f h t rn. n th r r d r n f r pr v n th G r . h p ll tr n r rd t h r d pl t n f l nd r rv t th xp n f n n r t n , xt r n t n f thr t n d pl nt nd n l p , nd p ll t n f th nv r n nt. h pr p l f r ll d " r n" G nt nd d t h v h n pr v nt. h d th t dj t n G f r d pl t n f n t r l r r , f r d r d t n f th nv r n nt nd f r xp nd t r n b t n nv r n nt l d r d t n h ld pr v d b tt r r f h n n th n t ll b n nd n pr v d t l f r ppr n v r p l pr p l . h pr nt rt l r th t th ( nf rt n t l n t pl tt r. Ind d t r d th t h ld v d n tr t n r n G . h r r lt rn t v t r n G , nd f th r d r b d n th f ll n . In h rt, r f r ppl nt n G th th r t p f nd t r nd nf r t n, r th r th n v rb rd n n lr d v r xpl t d nd t r th t n th r nt rpr t t n.
Intr d t n Figure 1 and 2 shows the trend in GDP in Norway over the One reason for Norway's wealth is its unusually ample past 130 years and the trend in global average temperature. supplies of natural resources such as hydropower, forests, Although both curves show an upward trend, the link between fish and not least oil and gas. Moreover, Norway is a GDP and temperature is neither a direct nor simple one. beautiful country whose natural environment possesses a richness and quality that are the envy of many. Given this We see that GDP has expanded dramatically over the past fortunate situation it is natural to ask whether we are hundred years or so. Indeed it is probably widely agreed taking adequate care of our natural wealth. For example, is that we are better off now than a hundred years ago. the present generation depleting more than its fair share of Nevertheless most people will probably question the the petroleum wealth at the expense of coming genera- notion that we are vastly better off. Some even contend tions? Are we polluting the country "excessively" (how- that the economic growth we have seen since the 1960s ever this may be defined)? Are we taking proper care of reflects no improvement whatsoever in our welfare. One our flora and wildlife? Probably many people have felt that tangible sign of this may be the unease felt by many today Norway's economic progress over the past century has not owing to the threat of global climate changes. led to a corresponding increase in the quality of life, partly as a result of greater pollution of earth, air and water and The proponents of a green GDP single out two factors in partly as a result of changes in social patterns accompanied particular that they believe should be applied to adjust tra- by isolation, family breakdowns, etc. ditional GDP: 1) extraction of natural resources or "drai- ning" of the resource wealth, and 2) activities devoted to In recent years these and other factors have led to calls for protecting the environment against degradation. For ex- an environment-adjusted gross domestic product - a so- ample, the oil income is included in GDP although the in- called "green" GDP. Such calls are rooted in a notion that come partly stems from draining of oil reserves and can politicians and others responsible for guiding social therefore be said to be at the expense of the income of sub- development use GDP as an important strategic indicator, sequent generations. Again, GDP may grow when, for in- not least when faced with a choice between various policy stance, we install double or triple glazing in order to keep proposals. If GDP is growing quickly, the policy is sen- out noise. It goes without saying that noise diminishes sible and the country is on a good trend. If growth is slow rather than enhances our quality of life, at variance with or non-existent then we are on a correspondingly poor the trend in GDP. It is a simple matter to find examples trend and the policy proposal should be dropped. The where quality of life and GDP are on conflicting trends, green or environment-adjusted GDP is intended to take see for instance Mishan (1967) for some early examples. account of the degradation of the environment and drai- ning of resources that accompany increased economic acti- The calls for a green GDP raise a number of issues. Some, vity. The belief is that the green GDP will thereby reflect of a somewhat philosophical character, involve the nature changes in welfare better than the traditional GDP measure. of welfare: how it should be measured, and whether it is
1 Acknowledgement: An earlier version of this article was written as a contribution to the project entitled Sustainable Economics and appeared as a report from the project. The project, headed by Stein Hansen, came about upon the initiative of the Norwegian Society for Conservation of Nature and Alternativ Framtid and was financed by the Norwegian Research Council, the Ministry of Finance and the Ministry of Environment of Norway.
33
A green GDP - Do we need it? Economic Survey 1/96
Figure 2. Global mean temperature Figure 1. GDP for Norway Centigrades Billion Nkr 100
90-
70- 60- 50- 40-
30- 20-
10. 1 1 nt n tn n t 1865 1885 1905 1925 1945 1965 1985 1865 1915 1952 1962 1972 1982 1992 - Observations 10 year running average Source: Statistics Norway. Source: httpilwww.giss.nasa.gov/Data/GISTEMP.
meaningful to compare the welfare of two persons, let (low activity level), say in Norway. Sometimes the inten- alone two countries. On a more pragmatic level there is the tion is to compare Norway with other counties, at other question of how natural resources and the environment - times we are most interested in comparing the trend within should be valued: what are nature and the environment worth Norway over time. measured in money terms? Some resources such as oil and gas are traded in markets which of course provides some The national accounts are intended to cover all economic information on their value. But is this sufficient to value them transactions in society, including in principle those that are reliably? For other resources, for instance most environmental illegal. The national accounts also include certain goods assets, there are no markets to provide price information, and services that are not traded in the usual manner in a and this of course compounds the problem of valuation. market and whose prices therefore have to be fixed on a more discretionary basis. The value of farm produce used Assuming that we find solutions to these problems, there is in the farm's own household is a pertinent example. The still the question of whether GDP ought to be adjusted. In value of living in one's own house is another. this article I discuss some of these problems and attempt to draw conclusions about the appropriateness of a green However the SNA also leaves out a lot, for example the GDP. Other researchers, such as Lone (1992), Nyborg and value of housework in the home and some aspects of what Aaheim (1991) and Aaheim and Nyborg (1995), have economists call external effects. A transaction between previously discussed this issue from other angles and two agents (persons or enterprises) will not normally affect arrived at roughly the same conclusions. others than those involved; one hands over an amount of money and receives a good or service in return, while for However, before discussing GDP adjustment it would be the other the converse applies. Sometimes however eco- useful to take a brief look at some national accounts con- nomic transactions of this kind can affect other agents in a cepts to clarify what, if anything, is to be adjusted. positive or negative direction without their being involved. It is these secondary effects that are called external effects. An example of a (trivial) positive effect would be my pur- G nd th r n t n l nt chasing an evening course in gardening. This would proba- n pt bly result in a nicer garden which would benefit my GDP and a number of other aggregates or economic indica- neighbours without their having helped to pay for the tors are calculated on the basis of data from the national course. While the cost of the evening course is covered by accounts (NA). The United Nations (UN) has drawn up a the national accounts, the same is not true of the benefit "recipe book" on how to design national accounts called accruing to the neighbours. Serious negative external ef- the System of National Accounts, or SNA for short. There fects attach to air and water pollution, road accidents and are many reasons for a country to keep an account of its aggravating noise. To some extent such factors reduce our activities, but the national accounts are primarily intended efficiency in the economic sense. Polluted water can for to provide a conceptual framework and data for evaluating example force me to stay away from work for a time. This and analysing the functioning of the economy; in other is captured in the national accounts via a reduction of eco- words to tell us whether the economy is in good shape, nomic activity. However, pollution also causes a welfare (i.e. running at a high level of activity), or in poor shape loss which does not necessarily affect my economic pro-
34
Economic Survey 1/96 A r n G - n d t?
ductivity. These effects are not covered by the national and services balance, public deficits, inflation and unem- accounts. ployment are relevant headwords here. Economic models based on national accounts data enable the study of the eco- It is important to realize that what is included or not inclu- nomic effects of various policy proposals, for instance how ded in the national accounts, i.e. the extent to which increased governmental activity will affect unemployment, transactions are quantified in the SNA on a discretionary inflation and the goods and services balance. basis, is not based on any "deep" economic principle, but is a function of the use to which the SNA is put. Hence it Since most countries prepare national accounts on the is difficult to criticise for instance GDP on the basis of same pattern (SNA), it is possible to compare economic principles alone. Criticism must take into account how the developments between countries. This is usually done by GDP measure is actually used (or misused). comparing, say, GDP or GDP per capita. This type of infor- mation is also used when fixing dues or contributions to The aggregated economic indicator gross domestic various international organisations such as the United product (GDP) is constructed on the basis of the national Nations or the World Bank, or when fixing the size of accounts. Formally GDP can be defined as the value of a international aid. nation's overall economic production as shown in the national accounts, less the value of labour and inputs. In National accounts in general, and GDP and the other indi- other words, GDP is a measure of value added in the eco- cators in particular, serve a variety of uses. In most cases it nomy and hence of what is available for consumption, in- is easy to point to flaws in such indicators. It would how- vestment and export. One important use of what we pro- ever be impossible to construct indicators capable of an- duce is to maintain machinery, buildings and other capital swering all questions satisfactorily. On the contrary, GDP equipment used in production. Failure to perform such and a number of other indicators represent compromises maintenance reduces our ability to produce in the future. If between the need for standardized, compact and simple in- annual capital consumption is deducted from GDP, we formation on the one hand and sufficient relevance to the obtain what is known as net domestic product2 (NDP), issues they address on the other. which in many ways is a better measure of the income actually at our disposal in the longer term, but it suffers from the weakness that capital consumption has as a rule G nd lf r to be estimated in a rather stereotyped manner. It is obvious to all that the welfare of a nation, i.e. the quality of life it provides, depends on a number of factors that are not captured by GDP or any other national account U f th n t n l nt nd G indicator. Suffice it to mention personal freedom, law and The most important uses for national accounts aggregates order, health and educational facilities and - of course - the today can be summarized in three points: to monitor econo- state of the environment, all of which are important factors mic developments over time, to study relationships be- that are omitted. Hence economic indicators such as GDP tween various parts of the economy and to compare econo- or GDP per capita alone are unable to tell us very much mic developments between countries. about the trend in welfare in a country over time or about welfare differences between countries.3 Through the national accounts it is possible to follow the trend in a number of economic aggregates such as private Even measuring welfare changes for a single person over consumption, investment, exports, imports, wages, taxes, time presents major fundamental difficulties. Not only do a etc. It is also possible to calculate the value of various eco- person's surroundings change, the person himself changes nomic indicators such as net borrowing, to find out how in a complex manner. Similarly it is difficult to compare much is saved and invested in various sectors, and the the welfare of two individuals in a meaningful way. A goods and services balance. Such information enables fairly common observation is that many people in develop- economic trends to be followed over time, and hopefully ing countries seem "happier" in the poverty of their every- this will give politicians and others enough information to day lives than the wealthy people of the industrialized make sensible economic policy decisions. However, it is world do. Perhaps our perception of our surroundings is worth noting that GDP alone cannot fill this role; it has to more important than the actual nature of our surroundings be supplemented by a number of other economic indicators. in objective terms. Or is it the relative differences in a society that are important? Assessing the welfare of the The national accounts can also be used to study the rela- society as a whole becomes even more problematic. tionships between various parts of the economy. The goods Should an increase in my welfare count just as much as
2 Sometimes one comes across the terms net national income (NN!). Net national income equals NNP pluss net primary income from foreign units. 3 Many proposals have been put forward for welfare indicators other than GDP. They include indicators constructed by Cobb and Daly (1989) (Index for Sustainable Economic Welfare - ISEW), Nordhaus and Tobin (1972)(Measure of Economic Welfare - MEW) and Uno (1992)(Net National Welfare - NNW). Perhaps the most "official" indicator is the Human Development Index (HDI) from the UN Development Programme (UNDP). It is beyond the scope of this article to give a description and detailed critique of all the above. Common to all of them however is their more or less explicit valuation of selected social, resource and environmental factors.
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A r n G - n d t? Economic Survey 1/96
that of a person who is far worse off (someone earning ded? What about expenditure on police services. Indeed, it less, jobless or seriously ill, etc)? I believe we should be can even be argued that expenditure on food is expenditure careful not to reduce welfare to numerical values of indi- on defence against hunger. What should be taken out of cators, green or otherwise. GDP becomes a question of what the "adjusted" GDP measure should be used for, and in particular of what other information is available to throw light on the issue in G n r th r d d nt question. At any rate it is probably useful in most cases to n nd p ll t n? have the traditional (unadjusted) GDP measure as a An often heard objection to GDP is that when someone is reference. admitted to hospital, for instance as a result of a road acci- dent, GDP increases. In the same way GDP grows when, say, cleaning equipment for atmospheric pollution is in- h n f n f G n p l stalled. It seems paradoxical that accidents and pollution d n should lead to increased GDP; welfare certainly does not The fact remains that GDP, or rather changes in GDP, increase with the number of accidents and quantity of often appear in debates about for example environmental pollution! Further comments are in order here. protection measures. However, I do not think the signi- ficance of GDP or GDP-like indicators should be over- First, it is reasonable to believe that once an accident, or stated. Even when the aim is the narrower one of assessing pollution, has taken place, being taken to hospital or clea- economic developments, other indicators can clearly be ning up the discharge entails an improvement in welfare. equally prominent: unemployment and the exchange rate Hence the fact that GDP increases as a result need not be a are two indicators which naturally spring to mind in our bad thing even if GDP is interpreted as an indicator of time. However, this is not to say that the trend in GDP is welfare (which it is not). without significance. An argument often encountered is that a particular environmental protection measure will be Second, it cannot be taken for granted that GDP increases, too expensive on the ground that it will reduce GDP, or say, with hospital admissions. The accident victim may even GDP expansion, by a certain percentage. Let us there- have been engaged in productive work which he or she fore take a closer look at what would be required if it were was unable to complete after the accident. This leads to a desired to adjust the GDP measure for changes in the state GDP loss. The question then is whether this loss is com- of the environment and extraction of natural resources. pensated for by the value added that arises in the hospital when doctors and nurses "repair" the victim. h v l f nv r n nt l t Taking the argument a step further, if society were such Most valuation in the national accounts is done on the that accidents were few and far between, fewer hospital basis of market prices, i.e. prices that are actually used in staff would need to be trained and employed. This would transactions in shops and elsewhere. In a hypothetical ideal free labour and other resources which could be applied in economy free from external effects these prices would other productive activity. In other words, treating accident reflect the value of the goods in the sense that the supply victims displaces other productive activity. Therefore, all of the goods, i.e. that which is produced, would exactly in all it is reasonable to believe that a society where few match the demand for the goods at these prices. People are accidents occur will generate a higher GDP than a similar in other words willing to buy all goods produced at these society afflicted by a higher accident rate, even though prices, neither more nor less. When valuation is such a hospital work is included in GDP. The same reasoning can simple matter it makes good sense to aggregate variables be applied to pollution. A society causing little pollution, from the national accounts up to GDP. and which does not need to spend resources on cleaning and other measures will as a rule generate higher added Valuation of goods which are not traded in any market, for value than a similar society which causes pollution that has example environmental assets, is more problematic. Even to be cleaned up to avoid adverse affects on public health so, such valuation is absolutely essential if we are to adjust and other disadvantages. GDP or any other economic indicator for changes in the state of the environment. The problem of environmental In particular, removing expenditure on hospitals and purifi- pricing can be illustrated with an example. cation measures from GDP will not automatically provide a better measure of welfare changes than GDP does. Such Consider a plant which uses river water in the production expenditures are termed defensive expenditures. Adjusting process and discharges polluted water. Suppose a town GDP for such expenditures would not only invite the prob- situated downstream uses the river to supply drinking lem of double-counting referred to above; it would also water. What is the value of pure water in this case? From incur the problem of defining and separating defensive ex- the supply side it can be argued that the cost of purifying penditures from expenditures on consumption. Cleaning the water to an acceptable drinking quality represents the measures are obviously included among defensive expendi- value of the water. In other words the value of the water is tures. But should expenditure on national defence be indu- determined on the basis of the cost of procuring pure drin-
36 Economic Survey 1/96 A r n G - n d t?
king water. Seen from the demand side on the other hand The above is intended to illustrate some of the problems the value the water equals the town's willingness to pay4 faced in valuing environmental assets. This is not to say The two methods of valuation are likely to give widely that information on willingness to pay or cleaning costs is differing results, and it is by no means obvious which of without relevance. On the contrary, it is important for deci- them should be used to adjust GDP. sion-takers such as politicians to be provided with such in- formation. But it is not correct for accountants to take con- The problem is compounded by the following factors. If troversial decisions about the value of environmental the factory had in fact purified its waste water its produc- assets and to incorporate such decisions, and to some tion costs would increase, and thus probably the price of extent conceal them, in apparently neutral information its products too. This would in turn affect other prices in about the trend in an environment-adjusted GDP. Such the economy which would lead to changes both in what is information should be presented by way of analyses whose produced and consumed in the economy. Finally GDP it- assumptions and suppositions are clearly presented and self would be affected. This is especially the case if the discussed. action taken is "big" in the sense that it affects large sections of the economy. General objectives of reducing If the conclusion from the above is that adjusting GDP for emission levels in a country may be an example of a "big" changes in the state of the environment is a complicated initiative. In other words it is not enough merely to find the matter, it may perhaps be hoped that fewer problems are value of the water in order to adjust the value of the water presented by natural resources that are traded in the for pollution; the traditional GDP measure also has to be market? In the case of Norway it should at least be pos- adjusted. Doing this requires a model of the economy, and sible to adjust G for the oil and gas that we drain from the entire task of adjusting GDP becomes a fairly wide- the North Sea each year? Let us consider this now. ranging analysis of inter-relationships in the economy, an analysis that differs from what we usually associate with keeping accounts. The distinction between analysis and t r l r r lth accounts is not always clear-cut, but in vague terms we A central element in the call for sustainable development could say that analysis results depend on a greater number is that our wealth should be passed on to the next genera- of assumptions (often hypothetical and thus controversial) tion intact. Besides foreign claims, fixed capital (machin- than those required for accounting purposes. The same of ery, buildings and infrastructure) and human capital (know- course applies if the value of the water is determined from ledge and technical insight), this wealth comprises natural the demand side. capital. One question therefore is how big is the natural
r 3 h p tr l lth nd xtr t n
5 —
W lth — — Extr t n
15 —
h nd ll n 19 - r 1000 —
5 —
-5 — 1973 1975 1977 1979 19 1 19 3 19 5 19 7 19 9
A further aspect is that surveying willingness to pay in a reasonably reliable manner may pose problems. In the same way the factory's clean-up costs may be difficult to determine. Perhaps the factory has been issued with an injunction to prevent it polluting the river, and, instead of purifying its emissions, it closes down or starts producing other goods. What in this case is the "purification cost"? We will let these problems lie for the present.
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A r n G - n d t? Economic Survey 1/96
capital. A pertinent concrete example is Norway's petro- ganisation can spend in the course of, say, one year with- leum wealth, i.e. the value of Norwegian oil and gas. out being worse off at the end of the year than at the start of the year. For simplicity's sake this could be said to The value of a capital asset is usually reckoned as the total correspond roughly to the net national product - NNP, i.e. discounted income accruing from it. In other words the GDP less consumption of real capital in the traditional value of Norwegian oil and gas equals the current value of national accounts. Adjusting GDP or, better, NNP would future income from oil and gas production. If pt is the (net) then include removal of consumption of natural and price of oil and gas in future year t and xt is the quantity of environmental capital. Some would assert that resources extracted oil and gas, the oil wealth is given by devoted to preventing environmental degradation etc., should also be taken out of GDP, but, as we have seen, this v , txt4 ±r t can lead to inconsistencies and double-counting. At any rate, defining and delimiting what should be allocated to where r is the (constant) discount rate. Hence the value of defensive expenditures is no easy task. the oil (the oil wealth) depends on future earnings, and is therefore determined on the basis of what we believe are We have also argued that defining the value of environ- reasonable future prices and production methods and le- mental capital in an uncontroversial manner is highly pro- vels. In practice it turns out that people hold widely diffe- blematic. Calculating the consumption of such capital is of ring views as to what are reasonable price and production course no less difficult and controversial. Indeed, even for paths. For example, Repetto and associates at the World an "ordinary" commodity such as oil it proved difficult to Resources Institute have in some contexts assumed that fu- find usable figures for the wealth it represents. These pro- ture prices will rise at a constant rate of increase according blems are closely related to the fact that definition of to the so-called Hotelling rule. Others, such as El Serafy at income depends on our vision of future events. John Hicks the World Bank, employ a constant price. It goes without was himself very aware of the problems this entails for the saying that the results, i.e. the estimated values of oil re- concept of income. He says in the chapter containing his serves, vary widely. definition of income quoted above: "It is hard to believe that the social income which economists discuss so much . Economists at Statistics Norway (Brekke et al., 1989) have can be nothing else but a mere aggregate of possible incon- estimated the value of the oil wealth on the basis of govern- sistent explanations." And a little later he goes on to say ment price projections in various contexts. Figure 3 shows that the concept of income is "one which the positive the result of this. economist only employs in his argument at his peril". The problem of course is that since the concept of income is The thin line shows the value of the drained reserves, critically dependent on expectations as regards future while the thick line shows how the estimate for the oil and events the concept gives precious little guidance as to what gas wealth has changed over the period 1973-1989. The conduct should be adopted. Put another way: if a mistake year-on-year changes in the oil wealth are essentially due is made, a mistake is made - and not even an environment- to changes in price expectations. For several years in the adjusted GDP can say much more than that about what period these changes exceed actual GDP! In other words arrangements should be made. the uncertainty as to future oil prices is so great that adjusting GDP for changes in the oil wealth renders the traditional GDP measure virtually irrelevant. Nonetheless f th t r n G analyses such as this represent useful information for What, then, can be done to persuade decision-makers and politicians and others. But once again we find that the ana- others to take sufficient account of the environment and lysis results should not without further ado be incorporated natural resources? My proposal is two-pronged. in the accounts and in the indicators based on them. Adjusting GDP for oil depletion is not as simple a matter In the first place they should be made aware of what has as our intuition might lead us to believe. happened to the environment and natural resources over time. This is best done by showing for example the trend in reserves of natural resources in physical units. Further- An tt pt t r p t l t n nd more, priority should be given to devising a set of environ- n l n mental indicators that provides concise information on the A reasonable interpretation of the concept of sustainable state of the nation's environment. Work in this field is in development is that national spending should not exceed progress under the auspices of the Ministry of the Environ- national income in the long run. The question however is ment, and Statistics Norway has contributed to this debate how to define income. The desire to adjust GDP can be (see for example Alfsen et al., 1992, Alfsen and Sæb9i, seen in the light of this question. A definition of income 1993). Such information, based on data expressed in physi- that has gradually gained currency and is often attributed cal units of measurement, can provide a useful basis for to the English economist John Hicks5 is the following: in- politicians to judge the gravity of problems faced in the come is that part of the monetary flow that a person or or- sphere of resource and environmental management. Put
5 Chapter 14 of Value and Capital.
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Economic Survey 1/96 A r n G - n d t?
briefly, my recommendation is to incorporate information Brekke, K. A., T. A. Johnsen and A. Aaheim (1989): on physical natural resources and the environment in the Petroleumsformuen - Prinsipper og beregninger, Økono- accounts. miske analyser, 5, 1989, Statistics Norway. Cobb, J. B. jr., and H. Daly (1989): For the common good. Second, analyses should be made, based on economic and Green Print, London. other models, of how various policy proposals can affect economic growth, the composition of such growth, the Hicks, J. (1946): Value and Capital, 2nd edition, Oxford at stock of natural resources and the state of the environment. the Clarendon Press, Oxford. The objective of Statistics Norway is to base these analy- ses on information about the physical effects of environ- Lone, O. (1992): "Accounting for sustainability: "Gree- mental degradation on the functioning of the economy. An ning" the national accounts?", paper to CIDIE workshop example might be the effect of air pollution on the number on environmental and natural resource accounting, Nairo- of sickdays in the workforce. If this is worked into the eco- bi, 24-26 February 1992. nomic model, the model will calculate what the value of a lost workday represents for Norway. Adopting this ap- Mishan, E. J. (1967): The cost of economic growth, Staples proach avoids bringing in more or less controversial pro- Press, London. Revised edition published in 1993 by blems of valuation but at the same time omits important Weidefeld & Nicolson Ltd., London. aspects of environmental assets. Cleaner air results not only in fewer sickdays, but also in other benefits, which Nordhaus, W. and J. Tobin (1972): "Is growth obsolete?", however are difficult to quantify in monetary terms. Other in Economic growth, National Bureau of Economic analyses might address the problem of valuing the petro- Research General Series, no. 96E, Colombia University leum wealth as well as the wealth of other natural resour- Press, New York. ces, and how this depends on factors believed to determine future prices. This could help to indicate whether we are Nyborg, K. and A. Aaheim (1991): Grønt BNP: Dårlig spending more of our return on this wealth today, in other svar på godt spørsmål, SosialOkonomen, 5. words whether we are "consuming" the family silver. These and other analyses will always be controversial, i.e. Uno, K. (1992): Composite measures of equality of life. build on more or less well-founded suppositions about Social, economic, and environmental accounting and valuation of environmental "goods" and natural resources. modeling. Paper presented at the 22nd General Conference The analyses will however point to uncertainties and of the International Association for Research in Income prompt debate on central assumptions in quite a different and Wealth, Flims, Switzerland. manner from figures in a set of accounts. In other words, we believe that neither the environment nor public dis- United Nations Development Programme (UNDP) (1992): cussion are served by squeezing all this information into a Human Development Report 1992, Oxford University single figure presented as an adjustment to another figure. Press, New York.
Of course these proposals face politicians and other deci- sion-makers with a task more difficult than that of asses- sing a single indicator - a green GDP. On the other hand, they may serve to increase politicians' awareness that the challenge of ensuring sustainable development is wider than assessing one indicator value against another. Reality, and all the uncertainty attached to future developments, must be squared up to. A green GDP will in many contexts do more to obscure problems than resolve them.
f r n Aaheim, A. and K. Nyborg (1995): On the interpretation and applicability of a green national product, Review of Income and Wealth, 1 1
Alfsen, K. H., K. A. Brekke, F. Brunvoll, H. Lurås, K. Nyborg and H. V. Sæbø (1992): Environmental indicators, Discussion Paper no. 71, Statistics Norway.
Alfsen, K. H., and H. V. Sæbø (1993): Environmental quality indicators: Background, principles and examples from Norway, Environmental and Resource Economics 3, 415-435.
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r h p bl t n n En l h
t tl
example, traditional exports, real wage and A complete system of consumer expen- S l nd consumer prices show both a procyclical diture functions with 28 commodity E n St d and countercyclical pattern, depending on groups is modelled and estimated by how we define the trend component in these means of Norwegian household panel Hilde Christiane BOrnland: series. The sensitivity of business cycles to data. Measurement errors are carefully Trends, Cycles and Measures of Persist- the measurement of the trend, implies that modelled. Total consumption expenditure ence in the Norwegian Economy one should be careful not to extract the is modelled as a latent variable, purchase SES no. 92, 1995. pp. 109. trend component without first examining expenditures on different goods and two ISBN 82-537-4220-7 the dynamic properties in the data. income measures are considered as indica- tors of this basic variable. The distribution This study analyses empirically the busi- of individual differences in preferences, ness cycles in Norway using quarterly represented by individual, time invariant national accounts from 1967 to 1994. To p rt latent variables in the expenditure func- extract the cyclical component, we need to tions, is structured by means of a two level eliminate the trend component in the data. utility tree which permits a partimonious Einar Bowitz, Nils-Øyvind Altehle, Virza S. However, the cycle will not be invariant to parameterization. The usual assumption of whether we describe the trend as stochas- Sasmitawidjaja and Sentot B. Widoyono: MEMLI - The Indonesian Model for no measurement error in total expenditure tic or deterministic. Testing for unit roots is clearly rejected. The standard assump- allows us to determine whether a series is Environmental Analysis. Technical Documentation tion in factor analysis of uncorrelated best described by a stochastic trend or by a measurement errors (purchase residuals) deterministic (linear) trend. By using a test Reports 96/1, 1996. pp. 70. ISBN 82-537-4223-1 of food groups which may be explained by for unit roots that allows for a structural rational shopping behavior of the house- break in the slope or the drift of the linear The Indonesian model for environmental holds. The purchase residuals for automo- trend alternative, we can reject the unit and macroeconomic analysis (MEMLI) is biles show negative serial correlation and root hypothesis for e.g. unemployment and documented. MEMLI is a 29 sector nation- positive correlation with the volatile corn- investment, and instead describe them by a wide model designed to analyse effects of ponents of latent total expenditure, which linear trend with one structural break. The traditional economic policy measures as is reasonable for such a durable good. The structural break point is unknown a priori, well as new policies such as tax-based en- first and second order moments of the ob- and for unemployment and investment it is vironmental policies, within the govern- served variables, which are the input in the estimated to have occurred in the late ment administration in Indonesia. Accor- analysis, consist of 2015 elements which 1980s. To extract cyclical components in ding to the model changes in energy prices are modelled by means of 213 structural the economic variables, we use a variety induce factor substitution. Energy in physi- parameters in our reference model. The of stochastic and deterministic trend alter- cal units and CO2 emissions due to com- maximum likelihood estimates of the latter natives. The detrended data (the business bustion of fuels are among the variables have, with only a few exceptions, the cycles), are thereafter analysed both in the included. The model captures important expected sign and a reasonable size. time domain and the frequency domain. In elements from the traditions of input-out- the time domain we concentrate on persist- put modelling, general equilibrium model- ence and correlations, whereas in the fre- ling and macroeconomic modelling. The Tor Jakob Klette and Svein Erik Fore: quency domain we establish whether the report contains the equation structure and Innovation and Job Creation in a Small cycles we have estimated have any impor- simulations of changes in a number of Open Economy. Evidence from Nor- tant periodic components. We then investi- policy variables. According to the model, wegian Manufacturing Plants 1982-92 gate whether the business cycle compo- there is a significant potential for reducing DP no. 159, 1995. pp. 34. nents are sensitive to the methods of trend pollution by using the market mechanism It is often claimed that the opportunities to extraction used. We find that for some without harmful effects on traditional create new manufacturing jobs in open, variables, the measures of business cycles macroeconomic variables. high-cost economies such as Norway, are are qualitatively independent of the way concentrated in products which are techno- we have extracted the trend, although logically advanced and knowledge inten- quantitatively, the results may differ some- sive. This paper examines the relationship what. For instance, analysing the correla- n p r between job creation and innovation, as tions between GDP and other economic measured by R&D investments, in Nor- time series, we find that some variables JOrgen Aasness, Erik Morn, and Terje wegian manufacturing. We compare job are persistently procyclical (e.g. consump- Skjerpen: creation in plants belonging to R&D firms tion, import, investment and productivity) Distribution of Preferences and to plants belonging to firms without R&D. or persistently countercyclical (e.g. unem- Measurement Errors in a Disaggregated We also compare job creation in plants ployment). However, the magnitude of Expenditure System belonging to high and low tech industries. these correlations varies. For other varia- DP no. 149, 1995. pp. 51. Our data set covers more than 80 per cent bles, the business cycles vary considerably of manufacturing employment in Norway with the detrending methods used. For over the period 1982-92. The paper chal-
40 Economic Survey 1/96
lenges the optimistic view about job crea- by allowing farmers to make investments Snorre Kverndokk: tion in R&D intensive firms and high-tech in soil conservation structures such as Tradeable CO2 Emission Permits: industries. Some main findings are: (i) Net terraces, bundles and ditches. It shows that Initial Distribution as a Justice Problem job creation is not higher in high-tech indu- the main conclusions arrived at in previous Reprints no. 82, 1996. pp. 20. stries. (ii) There is no clear-cut positive re- studies remain valid. The long-term effects Reprint from Environmental Values, Vol. lationship between net job creation and the of unanticipated permanent changes in 4, 1995, 129-148. R&D-intensity of the firm. (iii) There is prices and discount rates may go either less net job creation and less job-security way independent of whether conservation in R&D-intensive firms in the late 1980s measures are time-limited or have lasting Julie Aslaksen, Trude Fagerli and Hanne and early 1990s. effects on the soil base. A. Gravningsmyhr: Measuring Household Production in an Input-Output Framework: the Norwe- Steinar Holden, Dag Kolsrud and Birger John K. Dagsvik, Dag G. Wetterwald and gian Experience Vikøren: Rolf Aaberge: Reprints no. 83, 1996. pp. 21. Noisy signals in target zone regimes. Potential Demand for Alternative Fuel Theory and Monte Carlo experiments Vehicles Reprint from Statistical Journal of the DP no. 160, 1995. pp. 27. DP no. 165, 1996. pp. 43. United Nations, Vol. 12, No. 2 1995. Previous empirical evidence indicates that This paper analyses the potential house- uncovered interest rate parity (UIP) does hold demand for alternative fuel vehicles not hold for target zone exchange rates, Julie Aslaksen and Charlotte Koren: in Norway, by applying data from a stated like those in the European Monetary Taxation, Time Use and the Value of preference survey. The alternative fuel System and in the Nordic countries. We Unpaid Labor: Policy Implications for vehicles we consider are liquid propane explore a target zone model where the mar- the Redistribution of Income gas and electric powered vehicles in addi- ket inferes the probability of a realignment Reprints no. 85, 1996. pp. 8. tion to a dual-fuel vehicle. In this survey of the band on the basis of a noisy signal. each respondent, in a randomly selected Reprint from Review of Radical Political We show theoretically and through Monte sample, was exposed to 15 experiments. In Economics, Vol. 24, No. 2 1992. Carlo simulations that if the market over- each experiment the respondent is asked to rates the information content in the signal, rank three hypothetical vehicles charac- then this may explain the empirical results terized by specified attributes, according obtained from testing UIP for target zone to the respondent's preferences. Several exchange rates. versions of a random utility model are for- mulated and estimated. They include the ordered logit model and a model with pre- Torbjørn Hægeland: ferences that are correlated across experi- Monopolistic Competition, Resource ments. The model is applied to predict Allocation and the Effects of Industrial changes in demand resulting from price Policy changes, and to assess the willingness to DP no. 161, 1996. pp. 22. pay for alternative fuel vehicles. An indicator of allocation effects of indu- strial policy is derived from a theoretical framework of monopolistic competition. The indicator gives a qualitative picture of nt how industrial policy affects industry struc- ture and resource allocation, it identifies Dag Kolsrud: the policy measures that work as industry Documentation of Computer Programs assistance under various assumptions that Extend the SEEM Model and Pro- about underlying parameters, and it allows vide a Link to the RAINS Model a consistent comparison of the assistance Documents 96/1, 1996. pp. 41. effects of different measures. Indicator calculations of industrial policy represent an efficient alternative to numerical gene- ral equilibrium analyses, especially in pr nt international comparisons. Illustrative indi- cator calculations of Norwegian industrial policy are presented. Rolf Aaberge, John K. Dagsvik and Steinar Strom: Labor Supply Responses and Welfare Sverre Grepperud: Effects of Tax Reforms Soil Conservation as an Investment in Reprints no. 81, 1995. pp. 25. Land Reprint from Scandinavian Journal of DP no. 163, 1996. pp. 19. Economics no. 4, Vol. 97, 1995. Most studies on the problem of optimal soil conservation have analysed soil con- servation measures as being time-limited in their effect. This paper extends previous analyses of the soil conservation decision
1 Economic Survey 1/96
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S l nd n p r Kjersti-Gro Lindquist: Empirical Modelling of Norwegian Ex- E n St d ports: A Disaggregated Approach. JOrgen Aasness, Erik Biøm and Terje DP no. 100, 1993. Ingvild Svendsen: Skjerpen: Empirical Tests of the Formation of Expec- Engel Functions, Panel Data, and Latent Anne Sofie Jore, Terje Skjerpen and tations. A Survey of Methods and Results. Variables with Detailed Results. DP no. Anders Rygh Swensen: SES no. 83, 1993. 89, 1993. Testing for Purchasing Power Parity and Interest Rate Parities on Norwegian Data. Klaus Mohn: Ingvild Svendsen: DP no. 101, 1993. Modelling Regional Producer Behaviour Testing the Rational Expectations Hypo- - A Survey. SES no. 86, 1994. thesis. Using Norwegian Microeconomic Runa Nesbakken and Steinar StrOm: Data. DP no. 90, 1993. The Choice of Space Heating System and Knut A. Magnussen: Energy Consumption in Norwegian House- Old-Age Pensions, Retirement Behaviour Einar Bowitz, Asbjørn Rødseth and Erik hold. DP no. 102, 1993. and Personal Saving. A Discussion of the Storm: Litterature. SES no. 87, 1994. Fiscal Expansion, the Budget Deficit and Asbjørn Aaheim and Kanne Nyborg: the Economy: Norway 1988 91. DP no. "Green National Product": Good Inten- Nils Martin Stolen: 91, 1993. sions, Poor Device? DP no. 103, 1993. Wage Formation and the Macroeconomic Functioning of the Norwegian Labour Rolf Aaberge, Ugo Colombino and Knut H. Alfsen, Hugo Birkelund and Market. SES no. 89, 1995. Steinar StrOm: Morten Aaserud: Labor Supply in Italy. DP no. 92, 1993. Secondary Benefits of the EC Carbon/ Tom Kornstad: Energy Tax. DP no. 104, 1993. Empirical Life Cycle Models of Labour Tor Jakob Klette: Supply and Consumption. SES no. 91, Is Price Equal to Marginal Costs? An Inte- JOrgen Aasness and Bjart Holtsmark: 1995. grated Study of Price-Cost Margins and Consumer Demand in a General Equili- Scale Economies among Norwegian Manu- brium Model for Environmental Analysis. facturing Establishments 1975-90. DP no. 105, 1993. DP no. 93, 1993. p rt Kjersti-Gro Lindquist: John K. Dagsvik: The Existence of Factor Substitution in the Choice Probabilities and Equilibrium Con- Primary Aluminium Industry. A Multiva- Erling Holmøy, Gunnar Nordén and ditions in a Matching Market with Flexible riate Error Correction Approach on Norwe- Birger StrOm: Contracts. DP no. 94, 1993. gian Panel Data. DP no. 106, 1993. MSG 5. A Complete Description of the System of Equations. Reports 94119, 1994. Tom Kornstad: Snorre Kvemdokk: Empirical Approaches for Analysing Con- Depletion of Fossil Fuels and the Impact Ragnhild Balsvik and Anne Brendemoen: sumption and Labour Supply in a Life of Global Warming. DP no. 107, 1994 A Computable General Equilibrium Model Cycle Perspective. DP no. 95, 1993. for Tanzania. Documentation of the Mo- Knut A. Magnussen: del, the 1990 - Social Accounting Matrix Tom Kornstad: Precautionary Saving and Old-Age Pen- and Calibration. Reports 94/20, 1994. An Empirical Life Cycle Model of sions. DP no. 108, 1994 Savings, Labour Supply and Consumption Nico Keilman and Helge Brunborg: without Intertemporal Separability. Frode Johansen: Household Projections for Norway, 1990- DP no. 96, 1993. Investment and Financial Constraints. An 2020. Part I: Macrosimulations. Reports empirical Analysis of Norwegian Firms. 95/21, 1995. Snorre Kverndokk: DP no. 109, 1994 Coalitions and Side Payments in Internatio- Leif Brubakk, Morten Aaserud, Wilma Pel- nal CO2 Treaties. DP no. 97, 1993. Kjell Ame Brekke and Pål Børing: lekaan and Fritz von Ostvoom: The Volatility of Oil Wealth under Uncer- SEEM - An Energy Demand Model for Torbjørn Eika: tainty About Parameter Values. DP no. Western Europe. Reports 95/24, 1995. Wage Equations in Macro Models. Phil- 110, 1994. lips Curve versus Error Correction Model Terje Skjerpen: Determination of Wages in Large-Scale Margaret J. Simpson: Seasonal Adjustment of First Time UK Macro Models. DP no. 98, 1993. Foreign Control and Norwegian Manufac- Registered New Passenger Cars in turing Performance. DP no. 111, 1994. Norway by Structural Time Series Analy- Anne Brendemoen and Haakon Vennemo: sis. Reports 95/30, 1995. The Marginal Cost of Funds in the Pre- Yngve Willasen and Tor Jakob Klette: sence of External Effects. DP no. 99, 1993. Correlated Measurement Errors, Bounds on Parameters, and a Model of Producer Behavior. DP no. 112, 1994.
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Dag G. Wetterwald: Ingvild Svendsen: Terje Skjerpen: Car Ownership and Private Car Use. Do Norwegian Firms Form Extrapolative Is there a Business Cycle Component in A Microeconometric Analysis Based on Expectations? DP no. 126, 1994. Norwegian Macroeconomic Qarterly Time Norwegian Data. DP no. 113, 1994. Series? DP no. 140, 1995. Tor Jakob Klette and Zvi Griliches: Knut Einar Rosendahl: The Inconsistency of Common Scales Esti- John K. Dagsvik: Does Improved Environmental Policy En- mators when Output Prices are Unobser- Probabilistic Choice Models for Uncertain hance Economic Growth? Endogenous ved and Endogenous. DP no. 127, 1994. Outcomes. DP no. 141, 1995. Growth Theory Applied to Developing Countries. DP no. 114, 1994. Knut Einar Rosendahl: Annegrete Bruvoll, Solveig Glomsrød and Carbon Taxes and the Petroleum Wealth. Haakon Vennemo: Leif Andreassen, Dennis Fredriksen and DP no. 128, 1994. The environmental drag on long-term eco- Olav Ljones: nomic performance: Evidence from Nor- The Future Burden of Public Pension Be- Søren Johansen and Anders Rygh way. DP no. 143, 1995. nefits. A Microsimulation Study. DP no. Swensen: 115, 1994. Testing Rational Expectations in Vector Brita Bye: Autoregressive Models. DP no. 129, 1994. A Dynamic Equilibrium Analysis of a Anne Brendemoen: Carbon Tax. DP no. 145, 1995. Car Ownership Decisions in Norwegian Tor Jakob Klette: Households. DP no. 116, 1994. Estimating Price-Cost Margins and Scale Torstein Bye and Tor Amt Johnsen: Economies from a Panel of Microdata. DP Prospects for a Common, Deregulated Audun Langørgen: no. 130, 1994. Nordic Electricity Market. DP no. 144, A Macromodel of Local Government 1995. Spending Behaviour in Norway. DP no. Leo Andreas Grünfeld: 117, 1994. Monetary Aspects of Business Cycles in Thor Olav Thoresen: Norway. An Exploratory Study Based on The Distributional Impact of the Norwegi- Kjell Arne Brekke: Historical Data. DP no. 131, 1994. an Tax Reform Measured by Disproportio- Utilitarism, Equivalence Scales and Loga- nality. DP no. 146, 1995. rithmic Utility. DP no. 118, 1994. Kjersti-Gro Lindquist: Testing for Market Power in the Norwegi- Erling Holmøy and Torbjørn Hageland: Kjell Ame Brekke, Hilde Lurås and an Primary Aluminium Industry. DP no. Effective Rates of Assistance for Norwegi- Kanne Nyborg: 132, 1994. an Industries. DP no. 147, 1995. Sufficient Welfare Indicators, Allowing Disagreement in Evaluations of Social Tor Jakob Klette: JOrgen Aasness, Torstein Bye and Hans Welfare. DP no. 119, 1994. R&D, Spillovers and Performance among Terje Mysen: Heterogenous Firms. An Empirical Study Welfare Effects of Emission Taxes in Nor- Tor Jakob Klette: Using Microdata. DP no. 133, 1994. way. DP no. 148, 1995. R&D, Scope Economies and Company Structure: A "Not-so-Fixed Effect" Model Kjell Arne Brekke and Hanne Gravnings- Einar Bowitz, Taran Fcehn, Leo Andreas of Plant Performance. DP no. 120, 1994. myhr: Grünfeld and Knut Mourn: Adjusting NNP for Instrumental or Defen- Transitory Adjustment Costs and Long Yngve Willassen: sive Expenditures. An Analytical Ap- Term Welfare Effects of an EU member- A Generalization of Hall's Specification of proach. DP no. 134, 1994. ship The Norwegian Case. DP no. 150, the Consumption Function. DP no. 121, 1995. 1994. Thor Olav Thoresen: Distributional and Behavioural Effects of Ingvild Svendsen: Erling Holmøy, Torbjørn Hxgeland and Child Care Subsidies. DP no. 135, 1995. Dynamic Modelling of Domestic Prices Øystein Olsen: with Time-varying Elasticities and Ratio- Effective Rates of Assistance for Norwe- Tor Jakob Klette and Astrid Mathiassen: nal Expectations. DP no. 151, 1995. gian Industries. DP no. 122, 1994. Job Creation, Job Destruction and Plant Turnover in Norwegian Manufacturing. Ingvild Svendsen: Klaus Mohn: DP no. 136, 1995. Forward- and Backward Looking Models On Equity and Public Pricing in Deve- for Norwegian Export Prices. DP no. 152, loping Countries. DP no. 123, 1994. Kanne Nyborg: 1995. Project Evaluations and Decision Proces- JOrgen Aasness, Erling Eide and ses. DP no. 137, 1995. Audun Langorgen: Terje Skjerpen: On the Simultaneous Determination of Criminometrics, Latent Variables, Panel Leif Andreassen: Current Expenditure, Real Capital, Fee In- Data, and Different Types of Crime. A Framework for Estimating Disequili- come, and Public Debt in Norwegian Lo- DP no. 124, 1994. brium Models with Many Markets. DP no. cal Government. DP no. 153, 1995. 138, 1995. Erik BiOrn and Tor Jakob Klette: Airgen Aasness, Torstein Bye and Hans Errors in Variables and Panel Data: The Leif Andreassen: Terje Mysen: Labour Demand Response to Permanent Aggregation when Markets do not Clear. Welfare Effects of Emission Taxes in Changes in Output. DP no. 125, 1994. DP no. 139, 1995. Norway. DP no. 148, 1995.
43 Economic Survey 1/96
Alexandra Katz and Torstein Bye: Jørgen Aasness, Erik Mom and Eystein Gjelsvik, Torgeir Johnsen, Hans Returns to Publicly Owned Transport Terje Skjerpen: Terje Mysen and Asgeir Valdimarsson: Infrastructure Investment. A Cost Func- Engel Functions, Panel Data, and Latent Energy Demand in Iceland. Documents tion/Cost Share Approach for Norway, Variables. Reprint no. 68, 1994. Reprint 95/2, 1995. 1971-1991. DP no. 154, 1995. from Econometrica, 1993, 61, 6, 1395- 1422. Chunping Zhao, Olav Bjerkholt, Tore Karl Ove Aarbu: Some Issues About the Halvorsen and Yu Zhu: Norwegian Capital Income Imputation Knut H. Alfsen and Hans Viggo Sæbø: The Flow of Funds Accounts in China. Model. DP no. 155, 1995. Environmental Quality Indicators: Back- Documents 95/3, 1995. ground, Principles and Examples from Pål Boug, Knut Anton Mork and Trond Norway. Reprints no. 69, 1994. Reprint Hanne A. Gravningsmyhr: 7jemsland. from Environmental and Resource Econo- Analysing Effects of Removing Survivors' Financial Deregulation and Consumer Be- mics, 1993, 3, 415-435. Pensions, Using the Microsimulation Mo- havior: the Norwegian Experience: DP no. del LOTIE. Documents 95/5, 1995. 156, 1995. John K. Dagsvik: Discrete and Continuous Choice, Max-Sta- Pål Boug: Bjorn E. Naug and Ragnar Nymoen: ble Processes, and Independence from Irre- User's Guide. The SEEMmodel Import Price Formation and Pricing to levant Attributes. Reprints no. 70, 1994. Version 2.0. Documents 95/6, 1995. Market: A Test on Norwegian Data. DP Reprint from Econometrica, Vol. 62, no. 157, 1995. 1994, No. 5. 1179-1205. Einar Bowitz, Nils Øyvind Mtehle, Virza S. Sasmitawidjaja and Sentot B. Widoyono: Rolf Aaberge: Snorre Kvemdokk: MEMLI An Environmental Model for In- Choosing Measures of Inequality for Empi- Coalitions and Side Payments in Internatio- donesia. Technical Documentation of Data rical Applications. DP no. 158, 1995. nal CO2 Treaties. Reprints no. 72, 1995. Programs and Procedures. Reprint from Ekko C. Van lerland (ed.). Documents 95/7, 1995. International Environmental Economics, Theories, Models and Applications to Cli- Knut H. Alfsen, Torstein Bye, Solveig pr nt mate Change, International Trade and Glomsrød and Henrik Wiig: Acidification. Developments in Environ- Integrated Assessment of Soil Degradation TO. Kobila: mental Economics Vol.4, 1994, pp. 45-76. and Economic Growth in Ghana. Docu- An application of reflected diffusions of Elsevier Science Publishers B.V., Amster- ments 95/8, 1995. the problem of choosing between hydro dam. Olav Bjerkholt: and thermal power generation. Reprints Øystein Olsen and Ragnar Frisch and the Foundation of the no. 63, 1993. Reprint from Stochastic pro- Knut Anton Mork, Econometric Society and Econometrica. cesses and their applications (44 (1993) Hans Terje Mysen: 117-139). Elsevier Science Publishers Macroeconomic Responses to Oil Price Documents 95/9, 1995. B.V., North-Holland, 1993. ISSN 0304- Increases and Decreases in Seven OECD Olav Bjerkholt: 4149. Countries. Reprints no. 73, 1995. Reprint from The Energy Journal Vol. 15 (4). Ragnar Frisch and the Foundation of the Society and Econometrica. Olav Bjerkholt and Eystein Gjelsvik: Econometric Documents 95/9, 1995. Common Carriage for Natural Gas: the John K. Dagsvik: Producers' Perspective. Reprints no. 64, How Large is the Class of Generalized 1993. Reprint from Einar Hope and Extreme Value Random Utility Models? Steinar Strom (eds.) Energy Markets and Reprints no. 74, 1995. t t r Environmental Issues: A European Per- spective. Scandinavian University Press Olav Bjerkholt: 1992. ISBN 82-00-21435-4. Introduction: Ragnar Frisch, the originator Olav Bjerkholt: of Econometrics. Reprints no. 78, 1995. Review of Macroeconomic Modelling T. 0. Kobila: Needs of the Ministry of Planning of the A Class of Solvable Stochastic Investment Kingdom of Saudi Arabia. Notater 93/25, Problems Involving Singular Controls. 1993. nt Reprints no. 65, 1993. Reprints from Stochastics and Stochastics Reports, 43, Tom Eek, Jan Erik Sivertsen, 29-63. Gordon and Breach Science Pub- Knut H. Alfsen: Tor Skoglund and Knut Ø. Sørensen: lishers, S.A., USA, 1993. Natural Resource Accounting and Ana- Economic Accounts at Regional Level: lysis in Norway. Documents 94/2, 1994. Methods and Data for Norway. Notater JOrgen Aasness, Erling Eide and 93/35, 1993. Terje Skjerpen: Olav Bjerkholt: Criminometrics, Latent Variables, and Ragnar Frisch 1895-1995. Documents Knut H. Alfsen: Panel Data. Reprints no. 66, 1993. Re- 94/3, 1994. Demand for commercial and own trans- print from K. Haagen, D.J. Bartholomew port services in production sectors. and M. Deistler (eds.): Statistical Model- Anders Rygh Swensen: Notater 93/39, 1993. ling and Latent Variables. Elsevier Simple examples on smoothing macroeco- Science Publishers B.V. North-Holland, nomic time series. Documents 95/1, 1995. JOrgen Aasness and Bjart Holtsmark: 1993. Consumer Demand in MSG-5. Notater 93/46, 1993.
44 Economic Survey 1/96 E n rv 1995
App nd x
t f t bl
t n l nt f r r bl Al M r n f r At rr nt pr M ll n r n r 1 bl A M r n f r At n t nt 199 -pr M ll n r n r bl A3 M r n f r At n t nt 199 -pr r nt h n n v l fr th p r d th pr v r • 3 bl A M r n f r r nd 199 =1 r nt h n n pr fr th p r d th pr v r bl A5 l n f p nt S r C rr nt pr M ll n r n r 5
5
1 A IO A ACCOU S O O WAY
bl Al M r n f r At rr nt pr M ll n r n r
199 1995 9 1 9 9 3 9 95 1 95 95 3 95
n l n pt n xp nd t r f h h ld nd IS 37 7 5 1 9 1 3795 11 95 11951 1 7 9 1 9517 117 91 1 9 G d 3 19 9 3 5 5 3 55 5 333 773 573 593 19 7 57 S rv 199 5 57 3 51 73 5 1 5 95 9 9 9 5 5 r t p h br d b r d nt h h ld 175 1 13 933 3 739 5 3957 713 17 - r t p r h n r b
n n-r d nt -1571 -1 73 -31 3 -377 - - 515 -3 9 -3 -5 37 - n l n pt n xp nd t r f n r l v rn nt 1 5 5 19 3 5 5911 9 7 731 7 7193 1 n l n pt n xp nd t r f ntr l v rn nt 75 9 7 95 1 35 1 59 1 937 191 9 1 79 19317 1 79 195 3 C ntr l v rn nt nd v d l C ntr l v rn nt d f n 13 5 1 7 5 5 5 77 53 5 5 37 5377 55 7 51 5 17 n l n pt n xp nd t r f l l v rn nt 11 391 11 1 7 7 7317 7 7 155 51 73 395 5
Gr f x d p t l f r t n 1759 9 1 9331 39 3 51 7 59 331 5 5 5 5 3 Cr d p tr l nd xtr - t n nd tr n p rt v p p l n 5 1 9 7 1 1 3 1 9 133 5 11 11 1 1199 1 31 1 9
O n tr n p rt nd l dr ll n 3 1 13 79 93 -7 7 7 11 7 -1 71 771 M nl nd nd tr 119 7 1391 5331 75 3 3 3 35 3 13 331 3 397 3 M n f t r n nd n n 1 9 1 55 135 33 3 3 37 3 7 3 3 9 5 r d t n f th r d 113 7 119 3 137 3 5 9 1 3 11 319 3 3 1 3 G n r l v rn nt 77 1 9 1 5 19 5 9 3 177 5 7 19 939 ll n rv 3191 733 5 51 1 97 97 1 7 1 Oth r rv 51 53 7 1 17 1 5 1119 1 779 13 7 1 5 1 57 1 Ch n n nv nt r 19 9 9 3 53 5 3 1 1 1 31 7157 1 939 Gr p t l f r t n 195 5 17751 9 5 95 93 55 3 53 9 77 59
n l d t f d nd rv 1 71 197 1 195 5 1 15 9715 1 9 1 1 1 3 Demand from Mainland-Norway 7 31 7 513 173 177 9 1 79 7 3 33 1 19 19 1991 1 5 1
Exp rt 33 7 35 519 7 93 197 39 9 91 5 595 77 5 9 79 r d t n l d 1 1 3 1 3193 97 3 751 3 31 35 1 3 3371 3 57 3 79 Cr d l nd n t r l 1 1115 5 7131 75 9 9 75 573 3 Sh p nd pl tf r 11 9 11 95 171 197 99 39 3 7 35 9 1 35 S rv 917 5 1 3 1 7 9 1 1 1 39 37 5 7
t l f d nd rv 115 7 1 19 1 7 1 17 3 9 9 91 3 1 3 1939
I p rt 3 9 75 717 7 1 715 5 73 79 71 59 7335 7 55 777 r d t n l d 1 3 1 3 55 5 3 5 1 9 7 9 9 91 5 395 Cr d l 7 1113 1 7 3 7 3 35 7 1 1 Sh p nd pl tf r 1 9 9 55 3 13 195 7 5 5 55 S rv 5 33 1 19 9 13 3 35 9 1 1 7 3 9
Gr d t pr d t 7 33 9 7 97 1195 1 37 3 5 7 7 1 355 733 159 M nl nd- r 73 77 7 91 177 17 17 9 1 93 19 17 19395 1 9539 195 753
O l t v t nd n tr n p rt 13355 13 77 31753 339 7 319 3595 33 9 3 1 3 3 3 M nl nd nd tr 577 9 9 11 159391 15 9 9 1 511 17 31 17 1 7731 173175 1 3 39 M n f t r n nd n n 1 1 5 11 73 5951 37 7 99 9 53 97 737 3 5 r d t n f th r d 7153 7 5 1755 1 3 19 3 1 11 1 1 7 13 9 G n r l v rn nt 1391 1 9 1 3 5 3 3 3513 35 77 35 3 3 15 3 73 37 35 r v t rv 3 5 35 9 3 1 1 11 91 3 31 5 9 9 3 9 C rr t n t 79 3 7 17 19 99 19 13 3 5 19 7 1 1 97
r th th rt r f 1995 th l l t n r b d p n f r t r v l bl t t n d n b St t t r A IO A ACCOU S O O WAY
bl A M r n f r At n t nt 199 -pr M ll n r n r
199 1995 9 1 9 9 3 9 95 1 95 95 3 95
n l n pt n f h h ld nd I S 33577 99 9 1 13 1 99 11 7 1 1 1 13 1 357 111197 117393 G d 75 3 9 53 5 53 7 55 91 5 55 1 5 119 5 S rv 19 9 5 19 7 59 5 5 17 77 3 71 1 5175 9 1 r t p h br d b r d nt h h ld 1 9 17315 37 5 3 3 7 3 7 795 39 9 - r t p r h n r b n n-r d nt -15 9 -1 9 -3 -3 3 - 15 - 39 -311 -3 -5 7 - 59 n l n pt n xp nd t r f n r l v rn nt 17 75 177 19 3 1 39 39 7 51 77 5 3 5 n l n pt n xp nd t r f ntr l v rn nt 713 3 711 17733 177 3 17919 179 17 73 1797 175 7 179 5 C ntr l v rn nt nd v d l nd ll t v 51 51 59 1 7 3 1 7 1 9 1 9 1 75 1 951 1 1 1 73 C ntr l v rn nt d f n 19 19 3 95 91 5 17 5 9 5 7 5 5 51 n l n pt n xp nd t r f l l v rn nt 1 537 1 77 1 1 1 77 5 99 73
Gr f x d p t l f r t n 1 739 17 1 37 3 9 5 9 1 3 1 1 77 5 7 Cr d p tr l nd xtr - t n nd tr n p rt v p p l n 511 9 9 117 9 1 3 1 5 1 9 111 113 9 1 777 O n tr n p rt nd l dr ll n 1919 3 1 7 73 - 7 59 1 -1 573 M nl nd nd tr 11 3 3 3 17 911 3 17 3 3 1 31 13 3 197 3 937 M n f t r n nd n n 11 5 15 9 5 539 3193 3 935 3 1 7 77 r d t n f th r d 1 9 9 11 5 31 77 19 3 37 1 3 1 G n r l v rn nt 39 7 9 5 5 5 375 9173 5 1 55 973 9 ll n rv 3 55 9 753 51 9 5 3 31 1 9 35 9 Oth r rv 3 5 1 1 5 975 1 77 1 7 13 3 119 11 3 13 55 Ch n n nv nt r 9917 9 13 5 7 595 51 1 1 7 731 5 55 5 3 Gr p t l f r t n 1 7 591 7 77 9 5 93 7 5 7 3 5 53 933 557 5
n l d t f d nd rv 7 59 1731 191 5 19 7 19 7 35 19 9 19 7 37 175 3 nd fr M nl nd- r 713 5 7 1 1 19 17 5 9 1 5 7 193 5 17 7 179 1 7 3 19 715
Exp rt 33 3 3 1 39 1 3 53 5 95 99 9 9 779 r d t n l d 1 51 13 3 99 5 3 73 3133 3 5 3 9 31 1 1 319 3 3 35 Cr d l nd n t r l 11 7 1 1 9 97 7 31 3 3 3 7 95 5 3 3 3 5 Sh p nd pl ff r 1 9 11531 15 199 7 9 17 3 1 3 7 1931 S rv 7 57 193 1 7 1 7 1 7 1 1 9 1 131
t l f d nd rv 111 11 175 71 73 3 7 7 7 9 7 3 17 93 3 3
I p rt 7 35 3911 9 7 31 91 7 3 7 17 7 9 71 9 73 9 r d t n l d 1 5 19 5 5 55 5 9 1 7 1 7 7 5 51 Cr d l 97 1 1 3 3 3 3 1 39 3 1 3 Sh p nd pl tf r 1 3 97 357 375 19 3 1 5 19 7 5 S rv 7 7 9 7 1779 7 19 3 19 1 1 97 19 55 9 1 73
Gr d t pr d t 193 77 5 515 551 9 53 1 5 1 1 5 3 39 M nl nd- r 7 1 9 73119 17 7 1713 1 1773 5 1 7 57 1 93 175 95 1 19 3
O l t v t nd n tr n p rt 13 1 51 3 3 15 3 3 37 79 35593 3 9 5 3 M nl nd nd tr 397 5 15 5 1 155 1 11 1 9 1 135 15 597 1 357 17 5 M n f t r n nd n n 97 17 1 5 37 7 9 1 9 5 5937 5 37 3 1 r d t n f th r d 7 5 7 3 1 5 1 3 9 19 75 7 133 15793 1 11 G n r l v rn nt 13179 133 9 3 77 3 33 3 33 9 33113 33111 335 3 1 3 r v t rv 33 3 1 71 1 317 33 9 95 55 19 9 5 5 C rr t n t 1 7 311 15 1 77 1719 19 1 799 17 99 1 7 197
r th th rt r f 1995 th l l t n r b d p n f r t r v l bl t t n d n b St t t r 3
A IO A ACCOU S O O WAY
bl A3 M r n f r At n t nt 199 -pr r nt h n n v l fr th p r d th pr v r
199 1995 9 1 9 9 3 9 95 1 95 95 3 95
n l n pt n xp nd t r f h h ld nd IS 7 5 9 1 5 3 1 3 9 3 G d 5 3 3 1 5 5 3 3 1 9 3 5 S rv 1 5 3 1 5 1 1 1 r t p h br d b r d nt h h ld 5 1 11 1 9 -3 7 3 3 5 - r t p r h n r b n n-r d nt 13 3 -7 3 13 5 13 - 5 3 -1 -11 9 n l n pt n xp nd t r f n r l v rn nt 1 1 1 3 1 3 9 1 1 1 7 - 3 - n l n pt n xp nd t r f ntr l v rn nt - - - 3 - -1 - - 3 1 3 - 3 C ntr l v rn nt nd v d l nd ll t v - - 3 - - - 1 - -1 3 C ntr l v rn nt d f n -1 -1 7 - 3 -1 -1 - 3 - 5 n l n pt n xp nd t r f l l v rn nt 3 1 5 1 -
Gr f x d p t l f r t n 5 5 5 1 7 9 1 7 - 5 -1 5 1 9 Cr d p tr l nd xtr - t n nd tr n p rt v p p l n -7 -1 -1 13 -1 9 - 9 -17 7 -3 7 -9 1 3 O n tr n p rt nd l dr ll n - 7 5 35 9 - 13 - 1 -1 9 9 -53 1 - 9 9 -1 5 M nl nd nd tr 1 1 1 1 9 1 13 1 5 1 7 M n f t r n nd n n 5 3 7 - 1 -3 7 7 7 7 5 3 5 3 5 r d t n f th r d - 9 -9 9 1 -1 9 -3 3 -1 5 11 G n r l v rn nt - - -5 -1 1 7 7 9 - ll n rv 5 9 1 17 5 3 7 3 7 9 9 Oth r rv 1 17 1 1 3 9 3 3 1 1 11 5 Ch n n nv nt r 53 - 7 -775 5 -33 3 3 3 5 9 1 1 Gr p t l f r t n 9 9 5 5 3 3 3 11 5 1 1
n l d t f d 3 1 5 3 1 3 5 5 nd rv 9 3 9 9 nd fr M nl nd- r 5 3 9 5 1 5
Exp rt 5 3 7 11 7 1 7 5 5 7 3 r d t n l d 13 3 11 9 3 19 13 5 15 3 1 1 - 5 Cr d l nd n t r l 11 3 1 9 1 9 3 7 5 1 5 1 Sh p nd pl tf r -11 5 9 -13 -53 - 1 1 1 55 -55 S rv - 5 3 1 - 5 - 7 -3 3 - 9 -5 -1 9
t l f d nd rv 5 9 3 5 1 5 9 3 3 9
I p rt 1 7 11 1 7 3 5 3 3 1 5 r d t n l d 15 9 1 1 17 9 1 3 11 9 1 9 5 5 Cr d l -17 31 3 -1 5 - 1 - 1 1 - 5 5 31 1 - Sh p nd pl tf r -33 7 - 1 -7 -1 9 -5 -5 -3 -31 3 5 7 7 S rv - -3 5 -1 3 1 -3 1 - -3 1 - 3 -1
Gr d t pr d t 5 7 3 7 7 1 5 3 5 M nl nd- r 3 3 5 9 5 • 5 1 7 7
O l t v t nd n tr n p rt 1 3 15 9 13 3 7 5 3 11 5 7 M nl nd nd tr 5 3 3 9 5 5 3 9 3 7 M n f t r n nd n n 5 3 5 7 5 9 9 1 1 1 7 r d t n f th r d 5 5 1 1 9 9 7 9 G n r l v rn nt 1 1 5 1 9 1 1 1 1 1 3 r v t rv 5 3 5 9 3 5 5 5 7 3 1 5 1 1 7 C rr t n t 5 7 9 9 9 1 7 1 7 1 3 7 3 7
r th th rt r f 1995 th l l t n r b d p n f r t r v l bl t t n d n b St t t r
A IO A ACCOU S O O WAY
bl A M r n f r r nd 199 =1 r nt h n n pr fr th p r d th pr v r
199 1995 9 1 9 9 3 9 95 1 95 95 3 95
n l n pt n xp nd t r f h h ld nd IS 1 3 1 1 1 5 1 3 3 3 1 G d 1 1 5 1 1 7 3 3 1 1 S rv 1 7 1 3 5 7 1 3 1 7 1 1 r t p h br d b r d nt h h ld 9 1 7 3 1 9 - - 9 1 - r t p r h n r b n n-r d nt 9 1 7 1 7 9 7 1 1 1 1 n l n pt n xp nd t r f n r l v rn nt 1 1 1 3 9 1 n l n pt n xp nd t r f ntr l v rn nt 1 1 1 3 3 5 1 1 9 C ntr l v rn nt nd v d l nd ll t v 1 5 1 9 1 1 1 1 1 1 9 C ntr l v rn nt d f n 3 1 3 3 3 1 3 5 7 1 9 n l n pt n xp nd t r f l l v rn nt 3 5 5 7 3 1 9
Gr f x d p t l f r t n 3 3 1 1 1 3 3 Cr d p tr l nd xtr - t n nd tr n p rt v p p l n 3 5 7 3 1 5 5 1 O n tr n p rt nd l dr ll n - 5 91 -13 3 - -1 3 - 9 M nl nd nd tr 3 1 9 3 1 3 1 1 1 M n f t r n nd n n 1 1 7 1 1 9 1 7 5 1 5 r d t n f th r d 1 1 3 1 7 1 1 7 1 9 7 5 G n r l v rn nt 1 1 1 9 1 5 1 5 ll n rv 3 3 1 1 3 3 9 5 3 3 3 Oth r rv 9 1 5 1 - 3 5 Ch n n nv nt r -3 - 3 - - 7 7 -1 5 15 1 1 3 -7 5 9 Gr p t l f r t n 1 5 1 1 1 1 5 1 1
n l d t f d nd rv 1 1 1 1 5 1 3 1 7 1 9 nd fr M nl nd- r 1 7 1 1 1 1 7 1 7 3 3 1 9
Exp rt - 1 - 1 - 9 -1 5 1 3 -1 1 - 5 r d t n l d 7 1 -1 9 - 9 5 11 1 3 Cr d l nd n t r l - 3 -3 3 -1 - 5 - -1 - -9 - 9 Sh p nd pl tf r 1 9 -5 3 -1 3 1 9 3 -5 9 1 - 7 -7 S rv 1 1 7 1 1 3 1 1 1 7 1 1 7 1 1
t l f d nd rv 1 9 - 7 3 1 5 3 3 3 9 1
I p rt 1 9 1 1 3 1 3 7 1 1 r d t n l d 5 7 1 - 1 9 1 7 3 Cr d l -7 7 - -5 -7 -11 - - 7 3 1 -11 - Sh p nd pl tf r 1 -1 3 -3 9 -1 3 -1 3 - 7 -3 -1 S rv 5 3 5 3 7 3 5 1
Gr d t pr d t 3 -1 3 - 5 1 9 1 M nl nd- r 1 3 3 1 1 1 3 7 7
O l t v t nd n tr n p rt -7 -3 -1 9 -7 9 - 5 - - -9 3 -5 M nl nd nd tr 1 3 1 1 7 1 5 3 3 7 3 M n f t r n nd n n 3 1 1 1 1 7 3 9 9 1 1 3 9 7 r d t n f th r d 1 1 3 7 1 1 1 1 7 3 - - G n r l v rn nt 7 3 3 3 5 1 5 r v t rv - 1 7 - 5 1 - 5 5 1 1 3 C rr t n t 9 9 7 3 1 3 1 7 9 1
r th th rt r f 1995 th l l t n r b d p n f r t r v l bl t t n d n b St t t r 5
A IO A ACCOU S O O WAY
bl A5 l n f p nt S r C rr nt pr M ll n r n r
1994 1995 94:1 94:2 94:3 94:4 95:1 95:2 95:3 95:4
Exports 334746 352519 78934 81978 83946 89888 89165 85950 87725 89679 Goods 245572 265834 57496 59851 59286 68940 68084 64911 63940 68899 Services 89174 86685 21438 22127 24660 20948 21081 21039 23785 20780
Imports 282436 296751 67174 70218 71565 73479 71059 73358 74554 77780 Goods 197848 213430 48078 48875 48025 52870 52258 52596 51464 57112 Services 84588 83321 19096 21343 23540 20609 18801 20762 23090 20668
External balance 52310 55768 11760 11760 12381 16409 18106 12592 13171 11899
Primary income and current transfers from abroad 28730 29699 9409 6399 5790 7132 7881 7144 7820 6854 Interest 19030 20720 6090 4377 3996 4567 5689 5125 5263 4643 Dividends etc. 1868 3022 1009 355 280 224 526 942 764 79 nv t d rn n -1 19 - 351 - - 1 -33 -3 - 13 -7 -55 - C rr nt tr n f r t r 9 51 3 59 1 1 5 3 79 1 5 3 3 1
r r n nd rr nt tr n f r t br d 5999 53 1 15153 1 3 1 79 1 1 7 1 5 1 5 1135 Int r t 3157 957 11 7 1 957 9 13 71 93 v d nd t 1 5 1 33 3 7 15 1 11 3 1 1 73 nv t d rn n 17 -77 35 -113 9 57 -71 -111 195 -91 C rr nt tr n f r fr r 71 351 351 55 7 5 9 77 77 55
r r n nd rr nt tr n f r n t -31 - 3517 -57 -7 -7 -1 - 5 -7 - - 5
C rr nt xt rn l b l n n t 1 5 3 51 1 11 5377 55 1 11 1 51 5 7397
n l t n 7 1 9 - 1 5 3 3 55 -1 11 5 -1 3
t l n t nfl n p t l tr n t n -1 -1 1 - 71 - 71 - 71 - 71 -75 - 1 -59 -
r n th n t d bt f r 3 5 79 3 1 3 1 751 5335 911
r th th rt r f 1995 th l l t n r b d p n f r t r v l bl t t n d n b St t t r n l t n d t h n n x h n r t t r dr : St t t ntr lb rå tb 131 p -bl d - 33 O l
St t t r S l - nd b r pt n rv O x 131 p - 33 O l
l ph n + 7 l f x + 7 9 7
IS -537- - ISS 1- 3
OW St t t ntr lb rå 1111111 St t t r
7 1