A growing number of these jobs are related to exports of oil extraction equipment. The oil and gas industry has played a decisive role in the strong growth of the Norwegian economy over the past 40 years. The past 15 years stand out in particular. But this dependence on oil has also made the Norwegian economy vulnerable to changes in oil prices or a decline in petroleum revenues. Chart: High wage growth (not incl. the krone depreciation over the past two years) High domestic labour costs have also increased the Norwegian economy’s vulnerability. The cost level in the Norwegian business sector has increased sharply in comparison with our trading partners. A rise is followed by a fall, and oil prices have fallen by more than half since last summer. As activity and earnings from the petroleum sector decline, oil service companies must seek entry into other markets. With a high domestic cost level, that task may prove demanding. Chart: Fall in petroleum investment A decline in activity on the Norwegian continental shelf has long been anticipated. The fall in oil prices has accelerated and amplified an announced decline in activity. Norwegian exports to other oil-producing nations are also in decline. This does not mean that the oil age is now nearing an end. Nearly half of known oil and gas reserves on the Norwegian continental shelf have not yet been extracted2. Large new discoveries have been made over the past few years and the Norwegian oil service industry is still receiving new orders.
Since last November, the three-month Libor had been held at the desired level of 0.25%. However, from mid-May it began sinking rapidly and is currently well below that level. The fall in the rate is a sign that the banking system is currently holding a very large amount of liquidity. My colleague, Jean-Pierre Danthine, will talk about this in greater detail. Interest rates on the capital market have also fallen. In June, yields on 10-year Swiss Confederation bonds fell to a record level. The low capital market interest rates reflect a higher demand for Swiss government bonds. In addition, long-term inflation expectations continue to be firmly anchored. Private companies are also benefiting from low interest rates on capital markets. Credit risk premia have fallen further and rates of interest on bank loans are also at a very low level. Since the last monetary policy assessment, the Swiss franc has appreciated against the euro. It has simultaneously depreciated against the US dollar. As a result, the trade-weighted external value of the Swiss franc has only slightly increased. The expansionary monetary policy is also reflected in the monetary aggregates. Thus, the monetary base rose to a record CHF 128.6 billion in May, and growth of the monetary aggregates is continuing at a high level. For example, M2 was growing at 10.2% in May and M3 at 7.1%. Credit growth also increased further. After slowing to 2.7% in September 2009, the rate of growth increased to 4.1% in April.