Evaluation of Norges Bank’s projections for 2017

Abstract

Norges Bank's projections for economic developments, both in Norway and among Norway's main trading partners are an important basis for the formulation of monetary policy. Evaluations and analyses of forecast errors can enhance Norges Bank's understanding of the functioning of the economy and improve the Bank's forecasts. Norges Bank's projections for economic developments are therefore evaluated annually. This article starts with a brief overview of economic developments in 2017. This is followed by a comparison of Norges Bank's projections for 2017 with actual developments, and deviations are assessed in the light of historical forecast errors. Furthermore, the Bank's projections are compared with the projections of other forecasters in Norway. Projections for the global economy will be evaluated in a separate Norges Bank Paper. The annual projection for mainland GDP in 2017 from Monetary Policy Report 4/16 proved to be a fairly accurate forecast of actual developments. The projection for employment growth proved to be somewhat low, while registered unemployment fell more than expected. Also consumer price inflation as measured by the CPI-ATE and annual wage growth were lower than expected.