Øystein Olsen: Economic perspectives Annual address by Mr Øystein Olsen, Governor of the Norges Bank (Central Bank of Norway), to the Supervisory Council of Norges Bank and invited guests, Oslo, 16 February 2017. * * *  Accompanying slides. On 23 October 1921 the steamship Ulvsund was taken by surprise by one of the worst storms to hit Denmark in the last century. The ship sank and all 17 people aboard lost their lives. When the winds subsided, the Danish Meteorological Institute had to weather a storm of its own when it turned out the Institute had downgraded the storm warning the evening before. In his defence, Director Carl Ryder argued that it was impossible to predict that type of storm. But his defence was in vain as it transpired that the storm had been accurately forecast by Norwegian and Swedish meteorologists. A reluctant Ryder was ordered to the city of Bergen to learn the methods used by the Norwegian and Swedish meteorologists. The Norwegian physicist Vilhelm Bjerknes had since 1917 built up what came to be known as the “Bergen School” within the field of meteorology. His work had long focused on using the laws of physics to predict the weather. But the practical breakthroughs were first achieved when he, in his own words, “had washed ashore onto Europe’s stormiest and, from a meteorological standpoint, most eventful shores”.1 The shifting weather conditions on the west coast of Norway became a natural laboratory for Bjerknes and his fellow researchers.
High unemployment and low labour force participation among women may make room for further growth in employment even if the population stops growing. The demographic situation in Norway is more favourable, but the labour force in Norway is also likely to grow at a slower pace. Labour immigration, which has made an important contribution to the labour market since the turn of the millennium, has fallen sharply in recent years. The unemployment rate is relatively low in Norway, but many have dropped out of the workforce. One in six aged between 25 and 54 was without paid work in 2016. If we are able to mobilise more people to join the workforce, labour supply growth may hold steady, but the most likely scenario is slower growth in the labour force. Chart: Productivity growth The other factor, productivity, has contributed less and less to economic growth, which is a tendency we have seen for several decades both in Norway and other advanced economies. The question then arises whether the underlying growth potential of mature economies has diminished. Chart: Growth in technology leading countries and in Norway If we broaden our perspective to span several centuries, it is the rapid rise in productivity in modern times that stands out. For a long time, there were only marginal changes in living standards from one generation to the next. In economic terms, the Middle Ages was something of an ice age. The industrial revolution that began in England in the late 18th century put an end to this inertia.