I will then discuss the other side of global economic integration, namely the interdependencies between countries and markets. At the end of my remarks, I will offer some thoughts on what is likely to change with regard to monetary policy if global economic integration were to decrease again as a result of the war. Monetary policy in an integrated global economy The world has become increasingly interconnected economically over the past decades. Until a short while ago, we thought these ties would continue to become closer. The US-China trade dispute of recent times had already cast some doubt on the durability of global integration. The coronavirus pandemic has restricted mobility and strained global supply chains. However, the geopolitical confrontation we see today has an entirely different dimension. Russia’s invasion of Ukraine has reopened old rifts in many respects. We therefore have to ask what the consequences would be if the economic fragmentation already caused by the war were to persist, or even increase further? To assess this, I would first like to look briefly at the process of globalisation over the past thirty years or so. At the beginning of the 1990s, the erstwhile closed-off states of the Eastern bloc gradually began to open up, and so too did China and other Asian countries. Since then, economic integration worldwide has been considerable. Today, the value of goods and services traded internationally is three and a half times higher than it was then. Average real per capita income worldwide has increased by two thirds.
Øystein Olsen: The economic outlook Address by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), to invited foreign embassy representatives, Oslo, 29 March 2011. The address is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 16 March, Monetary Policy Report 1/11 and previous speeches. Please note that the text below may differ slightly from the actual presentation. *  *  *  Excellencies, Ladies and Gentlemen, I am happy to continue the tradition of my predecessor by inviting you to Norges Bank to discuss economic developments in Norway. Economic trends During the past few weeks, the world’s attention has been focused on the sufferings caused by the earthquake in Japan, as well as escalating political unrest in Middle East countries. The economic impact of these events is still uncertain. Apart from these, the economic and financial news of the past year has, on balance, been positive. The global recovery has gained strength, even though uncertainties persist. A common feature of the countries that fared well through the financial crisis was that they had kept their house in order. Norway falls into this group, although our abundant natural resource wealth puts us in a unique and favourable position. Against this backdrop, I would like to comment on our experience with implementing the prevailing frameworks for monetary and fiscal policy. Today we can look back at ten years of inflation targeting and the fiscal rule.