Øystein Olsen: Economic perspectives

Annual address by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), to the Supervisory Council of Norges Bank and invited guests, Oslo, 18 February 2021.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Introduction

One year ago, I stood here and delivered the annual address to 300 guests. This year is different. This evening there are no guests physically present at the central bank. The contrast with last year could hardly be greater.

The same also goes for the theme running through this evening's speech – the Covid-19 pandemic. Not a trace of it can be found in last year's speech. Yet, contagion was lurking right outside our borders. We sensed that something was brewing. Norges Bank was in the process of revising down its economic forecasts. The employees at our Shanghai office had been sent home, yet we did not foresee how far-reaching the outbreak in Wuhan would be. Two weeks after delivering last year's speech the first case was recorded in Norway – soon thereafter, Norway went into lockdown.

Since then, we have done what people do during serious epidemics – we engage in social distancing. We can still meet – in a way. Technological innovation has provided us with new possibilities.

During the Black Death, wealthy farmers from the western fjords of Norway isolated themselves in Jostedal, a remote valley that reaches into the mountains. They had to find new ways to communicate. The farmers maintained contact with the outside world by sending and receiving letters placed under a stone at the entrance to the valley.

This past year, the letter stone has been replaced by the internet.

A historically deep decline

Eleven months after the first lockdown, daily life has yet to return to normal. Norway has been quite successful in keeping down infection rates, although we have seen regular flare-ups. The country's borders are now closed.