Emerging versus developed economies”, Norges Bank Working Paper 2012/11 http://www.norges-bank.no/no/om/publisert/publikasjoner/working-papers/2012/11/. 4  Frankel, Jeffrey A. (2011), “How Can Commodity Producers Make Fiscal and Monetary Policy Less Procyclical?” in Beyond the Curse: Policies to Harness the Power of Natural Resources, ed. by Rabah Arezki, Thorvaldur Gylfason and Amadou Sy, International Monetary Fund. 2  BIS central bankers’ speeches  •  All government revenues from the oil sector must be transferred to the fund. •  Government spending, on average over the cycle, must be limited to the expected real return on the fund – estimated at 4 percent. This is known as the fiscal rule. The aim is to spend only the return generated by the fund’s investments, not the capital itself. •  All of the fund’s capital is invested abroad. Chart: Projected size of the oil fund At the time the fund was established, Norway was in the midst of a deep recession, and many doubted that any petroleum revenues would ever be saved. However, after a few years, the government’s cash flow from the petroleum sector started to increase sharply. The savings plan has since remained intact and the fund has now reached a size of more than USD 700 billion, or 140 percent of GDP. Chart: Structural non-oil budget surplus As a result of the fiscal rule, economic policy is more robust: First, by decoupling spending from current petroleum revenues, the fiscal rule provides for a gradual and sustainable phasing-in of petroleum revenue spending.
Global economic outlook  Let me turn to the global economic outlook. Growth was modest in the advanced economies in the first quarter of 2023. Although inflation declined again in many countries, it remains clearly above central banks’ targets. Core inflation in particular is still stubbornly elevated. Page 2/8  Zurich, 22 June 2023 Thomas Jordan, Martin Schlegel and Andréa M. Maechler  News conference  Against this background, numerous central banks have tightened their monetary policy further, albeit at a somewhat slower pace than in the previous quarters. The growth outlook for the global economy remains subdued. This is in particular attributable to the loss of purchasing power due to inflation in recent quarters and to tighter monetary policy. At the same time, inflation is likely to remain elevated worldwide for the time being. Over the medium term, however, it should return to more moderate levels, not least thanks to the more restrictive monetary policy and due to the economic slowdown. Our scenario for the global economy remains subject to large risks. In particular, the high level of inflation in some countries could be more persistent than expected. Equally, the energy situation in Europe could deteriorate again in Q4 2023 and Q1 2024. Swiss economic outlook  What is the economic outlook for Switzerland? GDP growth was solid in the first quarter of 2023. The services sector gained momentum, and there was also a slight increase in value added in manufacturing. The labour market remained robust, and overall production capacity has been well utilised.