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Norwegian State Fund Former Director

Norwegian State Fund Former Director

Oystein Olsen warns on Stagflation

Warning: Stagflation

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Amsterdam, May 3d 2022– The Norwegian state fund, with 1.2 trillion dollars (more than 1.1 trillion euros) in resources, the largest of its kind in the world, warns of stagflation. Due to high inflation, low interest rates and high stock prices, many risks lurk, of which stagflation is the greatest danger.

That’s what Nicolai Tangen, the fund’s chief executive, told the Norwegian parliament. Since 1996, Norway has been putting all the proceeds from the oil and gas sector into the fund, which invests the money to help it grow.


We have a wild ride ahead of us,” said Tangen. “The friction between the superpowers is rising and world trade is declining.”

According to the CEO, a scenario of stagflation is now more apparent than six months ago, when prices also rose sharply.

In the case of stagflation, inflation continues to rise, while the economy shrinks. If this happens, the fund could lose up to 40 percent of its value.

Value Norwegian State Funds

We now have a combination of large price increases and lower economic growth than before. Inflation is rising and growth is slowing,” Tangen added.

Former director of Norges Bank, Oystein Olsen further warned politicians to be careful not to squander the oil fund’s assets and capital. 

The Norges Bank Investment Management fund was established in 1990 to secure and invest globally the income from Norwegian oil and gas stocks. The fund has a market value of 11,900 billion Norwegian kroner, or 1,173 euros. 

The fund owns 15% of all listed companies in the world and achieved a return of 14.5%, partly thanks to the booms in tech stocks. Oslo uses part of the oil and gas piggy bank every year to successfully finance government spending. 

Oystein Olsen

And former banker Olsen is now warning that the fund’s growth rate over the past 25 years is unlikely to be sustained due to very low interest rates, expensive stock markets and inflation he says could remain quite high for a long time to come. So does Mr. Tangen of the Central Bank. 

‘ The upward movement has been going on in the stock market for quite some time now and may be coming to an end ; he says, instead of aiming for a growth path of 3%, it makes sense to put oil and gas revenue expenditure below that percentage. Otherwise we run the real risk of eating up the fund. And that can never be our intention’.


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