However, there is a risk that rising or persistently high oil prices may gradually curb growth among important trading partners. In its June Inflation Report, Norges Bank assumed that money market rates among our trading partners would rise gradually over the next three years. The path for domestic and external interest rates does not imply considerable changes in the krone exchange rate. Given solid global growth, demand for goods and services from Norwegian export companies may remain at a high level. A growing number of export companies are facing capacity constraints, particularly in the production of metals and refined petroleum products. Export growth in the years ahead will probably occur in industries such as the engineering and shipbuilding industries. Production growth is now high in these industries and employment is rising after declining over several years. Capacity utilisation in the Norwegian economy is now higher than normal. Strong global growth is supporting both high demand and favourable prices for the Norwegian export sector. Although petroleum investment is likely to peak this year, prospects of persistently high oil prices will contribute to continued strong demand from the petroleum sector. High oil prices also generate substantial central government revenues and there are prospects of strong growth in the Government Pension Fund – Global in the next few years. This means that spending in line with the fiscal rule will lead to an increase in the structural, non-oil central government budget deficit.
I therefore do not intend to discuss this specific issue today, but refer to the comprehensive academic literature. 2 Many analysts would argue that both of these changes, at least partly, share a basis, namely higher global saving, which, in turn, is a result of the world having become richer. 3 But I would like to separate them, as the discussion has primarily come to focus on the lower level of interest rates. The fact that the financial sector has also changed in several respects is something that needs to be given more attention, considering that the conditions on the financial markets steer how monetary policy is designed and acts. Allow me, therefore, to make a brief digression on the subject. In the 1970s and 1980s, the world's capital markets were gradually deregulated. This, combined with good global growth, which is to say a richer world, and the development of information technology, led to strong development on the global financial markets in terms of outstanding volumes, turnover and new instruments. The development had major advantages. With less regulation, the financial sector’s basic functions – executing payments, allocating savings to investments and managing risk – could be better managed, at the same time as the strong growth on the financial markets contributed to the strong growth in the global economy. But a larger financial sector has also led to greater potential risks, as exemplified by the financial crisis twelve years ago.