return krone exchange rate economic perspectives 15 february 2018 non−oil budget deficit 1 ) value of fund – 2000 – 2000 1 ) including discrepancies attributable to accounting differences between the central government accounts and norges bank ’ s financial statements. the cumulative discrepancy varies between nok 5 billion and nok 41 billion. sources : ministry of finance and norges bank during periods of substantial oil and gas revenues, large capital transfers have been made to the fund. the government ’ s total net cash flow from petroleum activities comes to around nok 5 000 billion. the return on the fund has been solid. the cumulative return amounts to more than nok 3 800 billion. 13 since 2014, the krone depreciation has also contributed to the considerable increase in the value of the fund in krone terms. this does not, however, affect the fund ’ s international purchasing power. the green bars in the chart show fund withdrawals used to finance the structural non - oil budget deficit. both returns and exchange rates vary over time. high equity prices have generated substantial gains for the fund in recent years. but this means we must also be prepared for losses when markets turn. looking back a few years to 2011, euro area financial markets were marked by the debt crisis. the return on the fund was negative. weak returns resulted in a decline in the value of the fund corresponding to 15 percent of mainland gdp ( chart 17 ). but the decline was not larger than what could be expected in one of six years based on historical experience. 12 at the end of 2017 q3, the value of the fund stood at nok 7 952 billion. 13 at the end of 2017 q3, the cumulative return was nok 3 814 billion. chart 17 illustration of declines in the value of the fund. decline in value as a percentage of mainland gdp given the same return as during 1 ) the euro area debt crisis 2011 – 2012 – 10 – 10 – 20 – 20 – 30 – 30 – 40 norges bank economic perspectives 15 february 2018 – 40 fund size and composition as in 2011 fund size and composition as in 2017 1 ) bond / equity allocation of 40 / 60 for 2011 and 30 / 70 for 2017. the return on the two asset classes is repre− sented by the fund ’ s benchmark indexes, measured in foreign currency, for the period june 2011 to may 2012. sources : statistics norway and norges bank today, the fund

##cial history and the new business cycle facts ” in : m. eichenbaum and j. a. parker. nber macroeconomics annual 2016, volume 31. university of chicago press. demand set the stage for a downward spiral. businesses failed and unemployment soared. third, there were few signs of an unaided return to economic stability. without powerful economic policy measures, there was a risk of a self - reinforcing recession. monetary policy had to take on substantial responsibility. norges bank economic perspectives 15 february 2018 in the past few years, advanced - economy growth has steadily strengthened. unemployment has fallen back, in europe too. in parallel with this, longer - term structural developments have changed the economic landscape. a more closely integrated world economy and technological changes are transforming aspects of everyday life and also have consequences for economic policy. trade and technology trade and technology have been key driving forces of growth in norway over the past two hundred years. oil and gas resources have provided a substantial boost to our income level, but even more important is the efficient use of our labour and capital. technological advances, increased education and better capital equipment have made us more productive. contact with other countries has helped us get more out of our common resources. many innovations have come from abroad, where we have also found markets for our own products. over the past fifty years, global trade has more than doubled as a share of global gdp ( chart 2 ). the scaling back of trade barriers has been an important driving force. since 2011, trade has expanded at a slower pace, primarily reflecting lower growth in the world economy. private investment in particular has lagged, but growth has also slowed because trade barriers are being reduced more slowly than earlier. 1 ) chart 2 global trade as a share of gdp. percent 2 ) 1 ) trade is defined as the sum of exports and imports of goods and services. 2 ) projections for 2017 and 2018. sources : imf, world bank and norges bank global trade has generated substantial welfare gains. as consumers, we have gained access to cheaper and better products. more importantly, over one billion people have been lifted out of poverty. 3 many people would be negatively affected if the tendency is reversed towards higher trade barriers. 3 http : / / www. worldbank. org / en / topic / poverty / overview. for a long time, trade primarily consisted of finished goods. in recent decades, global value chains have grown rapidly. lower transport costs and new technological solutions