Forget oil and salmon: – This is Norway’s most important industry – Hegnar Online

Skagen Funds holds on Wednesday its annual nyttårskonferanse.

One of the presenters has been former governor and finansråd Svein Gjedrem.

- Low interest rates can create bubbles

the Theme was, of course, the low interest rates.

- What we perceive as the natural rate of interest – likevektsrenten that provides stable inflation when the economy is not subjected to shock – have we seen fall significantly in many countries. From 4-5 per cent around the year 2000 is likevektsrenten now around zero, or barely positive, pointed out Gjedrem.

This, he believes poses significant challenges.

the Room for monetary policy measures if we again get a significant negative shift in the economy, gets smaller. Gunpowder is not completely dry in many countries, drew Gjedrem forward.

another challenge when interest rates are low for long, low returns in the financial markets. Many players will want compensation by taking higher risks in their search for yield, and it can create bubbles in individual markets. And not the least is the low interest rates a challenge for enkeltinvestorer that save for old age, continued the former central bank governor.

Norway’s most important industry

Gjedrem came further into how Norway has been a rentenist (who make their living on the profit from their economic positions).

its oil wealth is Norway’s most important industry, measured in expected returns. A half-percent deviation in the annual expected return of the fund equal to the entire value added that goes to workers and owners in the fish and aquaculture, said Gjedrem.

- Fish and aquaculture is a great industry, but the creation of value constitutes not more than a half a percent change in the expected rate of return for its oil wealth, he added.

After Gjedrems lecture came Skagens renteforvalter Torgeir Høien (as set in the sentralbankstyret together with Gjedrem) to set the former Norges Bank-the boss any questions.

Trumps protectionism is a danger?

Norway’s most important industry is its oil wealth was a food for thought, acknowledged Høien.

And the assertion, one should not build down for the people, underlined Gjedrem.

But what if the United states when president Donald Trump puts in time with his protectionism, and we are going into a terrible spiral of trade and kapitalrestriksjoner, have we not, then, a potential problem with its oil wealth? And then I think not only roi, but also all the money we have invested outside our borders. It may happen that we suddenly don’t get back our money when we need them? asked Høien.

IN the united STATES, the united Kingdom and Central Europe, where the majority is invested, is ownership greatly. The limitations that are most appropriate in the short term tariffs, and customs duties on imports, and subsidies of exports. This is something that the exchange rate should be able to handle without necessarily a major impact, but only if tollene is prohibitive and aimed at certain countries, said Gjedrem.

- In the first instance will therefore trade be exposed. But the return of the fund is actually goods to the country, and they are more expensive with protectionism, kontret Høien.

Yes, the consequence in the long term will be lower growth, and thus lower returns for investors, confirmed the former governor.