The change in trade patterns has made a considerable contribution to the sharp decline in prices for clothing, footwear and audiovisual equipment. Rapid technological advances have also pushed down prices for audiovisual equipment. 2  BIS Review 16/2004  •  Third, competition has probably increased in the retail industry and other service sectors in Norway in recent years. Initially, heightened competition affects companies’ profit margins. But enterprises will respond by reducing their costs. This will occur in part in the individual business, but subcontractors will also be required to reduce their prices and enhance efficiency. Therefore, increased competition usually triggers higher productivity growth in the economy. Low inflation may therefore be matched by growth in productivity. Prices for domestically produced goods and services are expected to rise towards the beginning of 2005 due to higher capacity utilisation in the Norwegian economy. Strong employment growth may contribute to somewhat higher wage growth than in 2004. At the same time, domestically produced goods and services are affected by exchange rate changes, albeit with a longer lag than is the case for imported consumer goods. There are clear signs that the global economy has passed the trough. However, while the outlook is brighter, price inflation is still low and interest rates are being kept unusually low. Economic growth is high again in the US, but there is still excess production capacity and very low inflation. Workforce reductions may no longer be as severe, but companies are still not hiring new staff.

The popular media sometimes calls Singapore the “Switzerland of Asia”. We have always taken the comparison as a great compliment. Switzerland is known the world over for its stability, prudence, efficiency, and diligence – all attributes that we in Singapore also aspire to. Both Switzerland and Singapore are small trading nations with a shared interest in promoting free trade and maintaining an open, rulesbased global economy. Switzerland is an important economic partner to Singapore. Many Swiss multinationals have a strong presence in Singapore and they are a source of high value-added investments. Similarly, Singapore companies are actively making direct investments in Switzerland. Today, Switzerland is our 5th largest trading partner in Europe while Singapore is Switzerland’s 4th largest trading partner in Asia. As central banks, SNB and MAS share some common challenges. Since the financial crisis, the openness, financial soundness, and strong fundamentals of our two countries have made us highly attractive to global capital, with implications for monetary and exchange rate policies, on which we exchange views. Our two institutions also have to manage a growing pool of official foreign reserves in a global market that is increasingly uncertain. The opening of SNB’s Singapore branch is an important milestone in the strong friendship and good relations between Singapore and Switzerland, and between MAS and SNB. Through this branch, our two institutions will come even closer together and I look forward to new areas of cooperation. BIS central bankers’ speeches  1  We value highly our relationship with SNB.