Over time, a strong krone and weak demand among major trading partner countries will probably have a dampening impact on activity in Norway. Little excess production capacity in OPEC countries, combined with the prospect of lower production in non-OPEC countries, has probably influenced oil prices. At the same time, there are prospects of continued strong demand growth in important oil-importing countries, such as China and some other emerging economies. More on the oil market The IMF has analysed supply and demand in the oil market for the period ahead in the latest issue of “World Economic Outlook”, published in April of this year. Assuming an annual global GDP growth of approximately 3 per cent and an oil price in line with market expectations in February 2005,1 demand for oil is expected to increase by around 2 per cent per year until 2030. Price expectations are higher now, but according to IMF calculations, the demand for oil in the long-term reacts relatively little to price changes. The growth in demand primarily reflects higher demand for fuel for motor vehicles, particularly in non-OECD countries. An increase in per capita income in China will in particular lead to a sharp increase in car use. Output in non-OPEC countries will peak in the not-too-distant future – in 5 years, according to IMF estimates. Higher demand will require higher output in OPEC countries. These countries have substantial oil resources but are currently producing close to capacity. Production capacity must therefore be increased.

The growing capital market in euro is becoming increasingly important as a source of financing for Swedish companies, so far primarily for major enterprises and institutions that can manage currency risk. This would provide a larger financing base without currency risk for Swedish companies if we were to introduce the euro in Sweden. It is not just the interest rate markets that have been affected by European integration and the general trend toward internationalisation. The changed market conditions have also affected competition and thereby the structure among market players. Financial activities tend to benefit considerably from large-scale operation. High, fixed costs in the form of training, highly skilled staff, large and resource-intensive computer and analysis systems, and information retrieval mean that unit costs fall as turnover volume increases. One way to attain a sufficiently high turnover volume for fixed costs or to limit the disadvantages involved in large-scale operation could be a strong specialisation of activities. The trend we can see today in individual countries, of banks merging to create larger entities, is a result of an attempt to reduce unit costs and thereby increase profit margins through economies of scale. However, very few banks have so far established operations on a large scale in other countries. Most institutions have the majority of their activities and earnings in their home country. The consolidation that has occurred through cross-border mergers and acquisitions has generally not yet led to a radically different market in the EU for the services traditionally provided by banks to households and small companies.